International News • China’s rich head for the exit
http://blogs.ft.com/beyond-brics/2012/0 … z1vnjhxmsY
China’s rich head for the exit
May 24, 2012
by Pan Kwan Yuk
There’s no denying that China has come a long way in terms of economic growth.
But even as the country produces ever more millionaires and foreigners flock to seek their fortunes in the world’s second largest economy, many of its elites are making a dash for the exit.
EB-5, a little-known programme in the US designed to attract more foreign investment, has seen a surge in interest from Chinese applicants as the country’s wealthy look to settle abroad or at least secure foreign citizenship.
The programme, which grants a green card to any foreigner who invests at least $500,000 in a business that creates 10 jobs in the US, received 2,408 Chinese applications last year, compared to just 772 in 2010, and 63 applications in 2006 according to US Department of State data published by The Association to Invest In USA (IIUSA).
Chinese applicants accounted for 70 per cent of the global total last year and demand shows no sign of abating. In a year that has seen China rocked by political infighting at the top and mounting evidence that the economy might be heading for a bigger-than-expected slowdown, some 1,675 applicants from China have already applied for the card in the first three months of this year.
The numbers dovetail with surveys released last year by rich list publisher Hurun Report and Bain & Co. According to the two surveys, 60 per cent of about 960,000 Chinese people with assets of over Rmb10m ($1.6m) have already begun the process of emigrating or are considering doing so. The US was the top destination, followed by Canada, Singapore and Europe. But immigration officials in less obvious destinations such as St. Kitts and Nevis in the Caribbeans, as well as Bulgaria, are also reportedly seeing a sharp in interest from well-off Chinese.
Topping the list of reasons for emigration is the deteriorating quality of life – including fear over worsening pollution, food safety scandals and inadequate social services. A desire for better medical treatment and access to an US education were also cited.
Rich Chinese “investing” their way to US citizenship is nothing new. The EB-5 program was originally created in 1990 to attract well off Hong Kong residents looking to flee before the British colony reverts back to mainland Chinese rule in 1997.
In theory, the EB-5 programme should create a win-win situation for all those involved. Cash-strapped cities get much needed investment for projects that would help combat unemployment and high net-worth investors get to hedge against political and economic instability back home with US residency.
But in practice, the programme has been mired in controversy – with critics saying that it has benefited more the middle men and project promoters than the communities and investors it was supposed to help. Stories of projects gone awry are not uncommon. In extreme cases, investors have been left high and dry, after losing their investments and not being granted green cards.
To be sure 2,408 applications from a country that boasts a million millionaires might not seem much. Still, the fact that the programme, in spite of its flaws, is seeing a jump in interest from mainland Chinese, is telling.
For all its economic gains, it seems fewer and fewer of China’s elites have faith in the country’s ability to protect them or their wealth.
Statistics: Posted by yoda — Thu May 24, 2012 9:27 am
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