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By Micah McCartney
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China is expected to lose more wealthy people via emigration than any other country this year, according to a recent study, with the U.S. predicted to be their top destination.
"China is again on track to be the biggest millionaire loser globally, with an anticipated net exit of 15,200 [high-net-worth individuals, or millionaires] this year," said a report published June 18 by British investment migration consultancy Henley & Partners (H&P).
Since China ended its strict COVID lockdown policies at the end of 2022, the world's second-largest economy has had a stuttering recovery, plagued by a real estate crisis, high levels of local government debt, youth unemployment, and lukewarm consumer demand.
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This has coincided with Chinese President Xi Jinping's crackdown on open displays of wealth and tighter grip on the Chinese economy, with a focus on "common prosperity" to reduce wealth inequality and promotion of sustainable growth.
This has been a drag on wealth accumulation, wrote Curtis Chin, former U.S. ambassador to the Asian Development Bank, and may have impacted China's wealth flight, though it represents a small percentage of the country's 862,400 millionaires.
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"If not booming, the U.S. economy is riding the economic roller coaster of the past two years with greater than its comparable competitors in Europe. In recent months, Wall Street has again started to register record gains," wrote Misha Glenny, head of Vienna's Institute for Human Sciences.
After the U.S., the next five most popular destinations for wealthy mainland Chinese are expected to be, in descending order, Canada, the European Union, Singapore, Japan, Hong Kong, Andrew Amoils, head of H&P data intelligence partner New World Wealth, told Newsweek.
The U.S. is set to welcome more than 3,800 millionaires overall, second only to the UAE (6,700) and just ahead of Singapore (3,500).
U.S. Citizenship and Immigration Services with written requests for comment.
Guonan Ma, senior fellow at Asia Society Policy Institute's Center for China Analysis, pointed to several possible factors behind the growing trend.
One is Xi's regulatory crackdown on the country's technology sector in recent years.
Five Chinese tech giants, including Alibaba Group and Tencent, lost a total of more than $1 trillion in market capitalization between late 2020 and July 2023, according to data from financial market data provider Refinitiv.
The crackdown "might have scared off some local private entrepreneurs who may wish to seek safer harbors away from home," Ma said.
Also speeding up the outflow of capital are the ongoing property sector downturn and deflationary pressures that have "widened the gap of returns on dollar and renminbi (RMB) assets," he added.
Other factors that could be driving Chinese entrepreneurs and investors to diversify their assets are perceived "higher domestic political and geopolitical risks."
Asked about the millionaire flight, Chinese embassy in the U.S. spokesperson Liu Pengyu said, "Economic globalization has greatly improved the freedom and attractiveness of immigration between countries and regions, and for individuals, immigration is their personal choice."
He said "the basic trend of China's long-term economic growth will not change," adding that the country remains attractive to foreigners seeking to study, live, and work there.
China and India, which ranked third in terms of projected high net-worth emigration, "are seeing high net outflows because of the success of their sizable economies in generating new millionaires, although slowing wealth growth in China in recent years could mean sustained losses become more damaging over time," wrote Hannah White, CEO of the London-based Institute for Government, for H&P.
China saw its millionaire count soar by 92 percent between 2013 and 2023, according to H&P. However, the country is still struggling with falling property market values. Real estate in China is estimated to comprise 25 to 30 percent of its gross domestic product, and before the property crisis, some 70 percent of family wealth was tied up in real estate.
As China's economy slowed, the number of Chinese billionaires fell by 155, or 19 percent, according to this year's Hurun Global Rich List report. The Hurun Research Institute is a China-based research firm,
Earlier this year, credit rating agencies Fitch and Moody's both downgraded China's sovereign credit outlook from stable to negative, reflecting concerns over China's ability to manage its debt and fiscal challenges.
The United Kingdom is forecast to lose 9,500 millionaires this year, the second-largest global exodus and about twice the amount of 2023, according to the H&P report.
Update 06/25/24, 1:12 p.m. ET: This article has been updated with additional context and comments from Guonan Ma, Liu Pengyu, and Andrew Amoils.
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