China’s Growing Rich Spell Trouble for the Country
According to a report released on June 20, 2017, by China Merchants Bank and Bain & Company, the number of rich people in China increased nearly 9-fold in the past 10 years, 70 percent of whom accumulated their wealth within the last 5 years. The analysis indicated that the surge in the number of rich people has given rise to two social problems:
- Social unrest caused by the friction between the rich and the poor
- A significant loss of China’s talent and wealth is driven by rich people migrating overseas seeking a safe living environment
The ultimate cause of China’s economic inequality is the crony capitalism created by the combination of its political and wealth distribution systems, whereby government officials are allowed to conduct personal business using their positions.
Rich people’s insecurity in Chinese society drove an upsurge of emigration
The divide between the rich and the poor not only created social turmoil but also drove large waves of emigration of rich Chinese from China, resulting in a loss of talent and wealth. According to overseas media reports in January this year, more and more of China’s middle class are leaving China due to concerns about security, protection of wealth, the education system, and food safety, as well as high property prices and pollution.
According to the Blue Book of Global Talent – Annual Report on Chinese International Migration published by the Center for China and Globalization, every year in the last few years, about 150,000 Chinese nationals obtained permanent residency in other countries, including the United States, Canada, Australia, New Zealand, and Singapore.
Political analyst Chen Po Kong commented during his visit to the United States that the middle class of Chinese, who have profited from the reforms, were once considered the backbone of maintaining the one-party dictatorship, but in the last few decades, the laws and regulations have not kept pace with China’s high economic growth affecting the interests of the middle class.
Running away from pollution is also one of the reasons that motivated the rich to leave China. China’s travel site “Ctrip” reported that approximately 150,000 Chinese tourists traveled abroad to avoid the haze in December 2016, and more than 1 million annually did so for the same reason.
The China Private Wealth Report 2017 showed that wealth protection is a common goal of rich Chinese. Most of China’s wealthiest people stressed that their top priorities are “wealth preservation” and “wealth inheritance.” In a 2009 survey, more than half of the high net worth Chinese considered “wealth creation” or “quality of life” their primary concerns.
Additionally, Hong Kong, the United States, Australia, Canada, and Singapore became the top five investment destinations of rich Chinese. Respondents said that the three main reasons for their overseas investment are to diversify investment risk, capture market opportunities, and migration.