China’s billionaires looking to move their cash, and themselves, out | China | The Guardian

 Crackdowns on financiers, roiling political climate and slowing economy under Xi Jinping has many seeking exit plans

Amy Hawkins Senior China correspondent   @amyhawk_

Mon 30 Oct 2023 23.10 GMT

Chinese 100 yuan notes. Of the world’s estimated 2,640 billionaires, at least 562 are thought to be in China, down from 607 last year, according to Forbes. Photograph: Frederic J Brown/AFP/Getty Images

Billionaires are notoriously difficult to track. It’s no surprise – the easier they and their assets are to find, the easier they are to tax. But by all accounts, the number of uber-wealthy people in China is in decline. Of the world’s estimated 2,640 billionaires, at least 562 are thought to be in China, according to Forbes, down from 607 last year.

With crackdowns on financiers and a roiling political climate, many of China’s rich people are looking to move their money, and themselves, out of the country.

China’s elites have long looked for ways to take their money overseas. Officially, individuals are only allowed to transfer $50,000 (£41,000) out of the country each year. But in practice wealthy people have a range of official and unofficial ways of shifting their funds, whether that is through money exchanges in Hong Kong, where capital controls do not apply, or funnelling cash into overseas businesses.

In August, police in Shanghai arrested five people who worked at an immigration consultancy, including the company’s boss, on suspicion of facilitating illegal foreign exchange transactions in excess of 100m yuan (£11m). In a state media report, the police said “illegal foreign exchange trading seriously disrupts the order of the country’s financial market”.

Before the pandemic, about $150bn flowed out of China each year via tourists taking their funds overseas, according to estimates from the Natixis, a bank. Although international travel has not returned to pre-pandemic levels, high US interest rates and a weak yuan are a strong incentive for cash-rich Chinese to move their money out of the country, economists say.

In the first half of 2023, there was a shortfall of $19.5bn in China’s balance of payments data, which economists use as an indicator of capital flight, although the true value of money unofficially leaving the economy may be higher.

Alicia Garcia Herrero, the chief economist for Asia Pacific at Natixis, says that “a high level of uncertainty about future economic policies and business opportunities in China” also encourages people to take their savings out of the country.

In 2021, Xi Jinping, China’s leader, resurrected a call for “common prosperity”, which was widely interpreted as a call for tycoons to share their wealth more widely. That year Alibaba, the tech company founded by Jack Ma, once one of China’s most high-profile entrepreneurs, donated 100bn yuan to the cause.

Xi is thought to be particularly mistrustful of China’s financial elites since more than $600bn fled the economy in 2015, after a surprise devaluation of the yuan. Since then Beijing has sought to tighten its grip on China’s wealth – and the people who have most of it. The Chinese Communist party (CCP) was particularly spooked when billionaires like Ma started to openly question China’s regulators (after Ma made his comments in 2020, he disappeared from public view for several years).

The “common prosperity” slogan has faded from view as Beijing seeks to promote China as a place that is open for business after three years of zero-Covid. But the pressure on business elites has not relented, and now that borders are open many are looking at exit plans. Last month Hui Ka Yan, the founder of the embattled property developer Evergrande and once Asia’s richest man, was arrested for unspecified crimes. Bao Fan, a renowned investment banker once seen as a kingmaker in the world of technology deals, was detained in February and has not been seen since. Other executives have been placed under exit bans.

The environment now is a marked shift from the 1990s and early 2000s, when China was preparing for entry into the World Trade Organization in 2001 and introducing a host of market reforms that allowed China’s entrepreneurs to amass huge wealth. That was an era in which money-making could come before anything else. But under Xi, who has consolidated his personal power more than any leader since Mao, the emphasis has returned to political control, rather than economic freedom.

“The arbitrary punishment being meted out to the wealthy class is unlike anything we have seen since the 1990s,” says Victor Shih, a professor of China’s political economy at the University of California San Diego. “This has prompted many in that class to think about diversifying out of China.”

There are increasing signs of wealthy Chinese decamping to nearby hotspots. More than 10% of luxury condos sold in Singapore in the first three months of this year went to mainland Chinese buyers, up from about 5% in the first quarter of 2022, according to data from OrangeTee, a real estate company. There are now about 1,100 single-family offices – firms set up to manage the wealth of a specific family – in Singapore, up from 50 in 2018, with around half of that boom estimated to come from Chinese clients.

Wealthy Chinese are also looking for ways to move themselves as well as their money out of China. About 13,500 high-net-worth individuals are expected to leave China this year, up from 10,800 last year, according to Henley & Partners, an immigration consultancy.

“The Chinese government plays for keeps, as Jack Ma and numerous others have discovered,” says David Lesperance, an independent consultant who helps ultra-high-net worth people to relocate. “So we have to look at how to protect your wealth and your wellbeing”.

Lesperance says he receives an increasing number of inquiries from businesspeople who want to move their whole teams out of China, not just their families. As well as the political risks, entrepreneurs no longer feel that China is a land of opportunity, he says. In 2017, China was minting two new billionaires a week. Now, economic growth has slowed.

“Before they would stay because they were making a ton of money in China,” says Lesperance. “Now they’re not making as much money. So they’re like, why am I staying again? Why am I risking this?”

 Additional research by Chi Hui Lin

https://www.theguardian.com/world/2023/oct/31/chinas-billionaires-looking-to-move-their-cash-and-themselves-out

China seeks to stifle public grief for former premier Li Keqiang

 Censorship targets ‘overly effusive’ comments, gatherings or references to Li’s views on economic reform

People lay flowers outside a building where the late Chinese premier Li Keqiang lived as a child in Hefei city, Anhui province, China. Remembering Li fondly is a ‘veiled articulation of unhappiness about Xi’, says one expert. Photograph: AP

Amy Hawkins

@amyhawk_

Mon 30 Oct 2023 19.04 GMT

Public tributes to China’s former premier Li Keqiang, who died on Friday, are being strictly controlled as the government seeks to prevent a mass outpouring of grief that could lead to social unrest.

Li suffered a sudden heart attack in Shanghai and died in the early hours of Friday, according to Xinhua news agency.

There have been public displays of grief, particularly in his home city of Hefei, in Anhui province, where hundreds of mourners laid flowers for one of their most significant sons.

Social media is awash with tributes to Li, who was once seen as a force for economic liberalisation in the highest echelons of the Chinese Communist party (CCP). But discussion online has been strictly censored to ensure that Li’s legacy adheres to the official narrative and does not mention talking points about political or economic reform.

A leaked memo, published by China Digital Times, shows that media outlets have been instructed to “pay particular attention to overly effusive comments” regarding Li’s death.

Many of the comments that referenced Li’s reputation as an economic reformer were deleted. One comment that was censored from Weibo cited a Li quote from his first year as premier: “Whatever the market can handle, let the market do more of.”

A man reads a newspaper with an obituary of Li Keqiang on a bulletin board in Beijing. Photograph: Tingshu Wang/Reuters

Despite being China’s premier for a decade, it is not clear whether Li will receive an official memorial in addition to regular funeral arrangements. At the regular foreign ministry press briefing on Friday, spokesperson Mao Ning declined to elaborate on any plans.

Students, seen by CCP elites as the most volatile demographic when it comes to protests, are being instructed to refrain from public displays that go beyond the official lines. Screenshots circulating on social media show a message from the youth league committee at Hainan University instructing students to “at most” share Li’s official obituary. The notice said any online or offline gatherings were “strictly prohibited”, according to a report in Taiwanese media.

Another notice posted to students at the Guiyang Institute of Aeronautics and Astronautics asked them not to make any comments about the “political situation” and to refrain from any public gatherings.

A man bows in front of the former house of Li Keqiang in Dingyuan county, Chuzhou city, in China’s eastern Anhui province. Photograph: Rebecca Bailey/AFP/Getty Images

When Li became premier in 2013, he was seen as someone who would embrace private enterprise and allow the free market to flourish. But he was gradually sidelined by Xi Jinping, China’s leader, who has reasserted the CCP’s grip on all parts of the economy. To many, Li now represents the path not taken by China’s increasingly authoritarian government.

The CCP is particularly fearful about reaction to deaths of senior officials or public figures. The deaths of former premier Zhou Enlai in 1976 and Hu Yaobang, a former CCP general secretary, in 1989, prompted widespread outpourings of grief that morphed into protests.

More recently, the deaths of Covid whistleblower Li Wenliang in 2020 and people in an apartment fire in Xinjiang in 2022 triggered expressions of public grief – with the latter becoming the “white paper” protests that spread across several cities at the end of last year. The CCP leaders are “haunted” by these memories, said Jeffrey Wasserstrom, a professor of Chinese history at the University of California, Irvine.

Many people have flocked to the Weibo page of Li Wenliang to pay their tributes to the more recently departed Li Keqiang. “Today, it seems another truth-teller with the surname Li has departed,” wrote one, in a post archived by China Digital Times.

Li Yuan, a columnist for the New York Times, described the public grief as “the most significant outpouring of emotion since the white paper movement”.

New footage from China congress fuels questions about why Hu Jintao was hauled out – video

Wasserstrom added: “There is definitely a lot of discontent in some quarters about Xi Jinping and little room to express it without taking a big risk … Expressing regret for Li’s death provides an opportunity for doing this in at least a veiled way.”

Prof Steve Tsang, the director of the SOAS China Institute, also said that “remembering Li fondly is a veiled articulation of unhappiness about Xi”.

With that in mind, Tsang said there was “no chance” that Xi would allow “anything but a small family affair” for Li.

Additional research by Chi Hui Lin

https://www.theguardian.com/world/2023/oct/30/china-seeks-to-stifle-public-grief-for-former-premier-li-keqiang

Li Keqiang obituary - The Guardian

 Outward-looking economist who served as Chinese premier during Xi Jinping’s first decade as president

Kerry Brown

Fri 27 Oct 2023 18.07 BST

Li Keqiang was considered a reformist, though was a loyal supporter of the party leader, Xi Jinping. Photograph: Xinhua/Shutterstock

Li Keqiang, who has died aged 68 of a heart attack, was the premier of the People’s Republic of China from 2013 to March 2023. Regarded as a reformist economist, in the decade before his appointment he had figured in many lists of those most likely to be the prime leader of the country after the expected retirement of Hu Jintao. But the final decade of Li’s career was mostly spent in the shadow of the man who eventually prevailed over him, Xi Jinping. Despite this, domestically and internationally he was regarded as a popular figure, and news of his unexpected death was met with respectful comments on Chinese social media.

As premier, Li was the epitome of the loyal, faithful supporter of the main leader. He never dissented publicly from the positions adopted under Xi, who as party secretary and president outranked him. In the early years of his central career, however, he had been supportive of policies which allowed more space to the non-state sector, and which supported further marketisation. As a vice premier in charge of economic affairs from 2007 to 2012, he referred to the need for the country to open up more spaces for growth, through developing its healthcare sector and building better quality infrastructure. He supported a key report issued by the thinktank within the National Development and Reform Commission ministry in 2012 which served as a blueprint for bolder reform. This was co-issued in partnership with the World Bank, and typified an era when Chinese and foreigners were able to collaborate and openly debate ideas about domestic reform.

In the early Xi era, placed in charge of the state ministries, it seemed initially that Li would be allowed large liberty to pursue the ideas of the 2012 report. Party meetings in 2013 and 2014 committed to a framework where the market was taken as key to further development, but with the crucial qualification that this should happen under the guiding hand of the state. That hand was to grow heavier as time went on. “Likonomics”, as Li’s approach was called, was increasingly replaced by “Xiconomics”. Politics took precedence over everything else. Anti-corruption campaigns, ideology training and the primacy of the Communist party above all else in society were the new central tenets. Li, as a technocrat, may have baulked at the wisdom of this approach, but under his stewardship, the economy continued to grow around 6% a year. Only with the onset of the pandemic in 2020 did things falter. By that time, Li was far more of a background figure. It was noticeable that even in overtly economic areas, other figures connected to Xi, such as the vice premier Liu He, took the lead.

Li differed from Xi in that he came from a relatively humble background, for even though his family included party officials, this was only at provincial level. Born in Hefei, the capital of central Anhui province, he was sent from high school for rural labour and joined the Communist party in 1976, and studied law at Beijing University, completing a master’s degree and going on to write a doctorate in economics in 1995. This work, demonstrating his sophisticated analytical skills and familiarity with western jurisprudence, was subsequently published.

Unsubstantiated stories linked him early on in his time at university with the Democracy Wall movement operating in Beijing. In 1978-79, activists responding to the liberalisation after the death of Mao Zedong in 1976 posted demands for political reform, and even democracy. Whether true or not, it is clear that Li made an early commitment to an official career, serving as head of the college Communist Youth League, an organisation that operated as a training ground for the party itself. This figured as an important power base over the 1980s and into the 2000s, and had been the source of support for other elite leaders such as Hu Jintao. Li cemented his position by becoming national leader of the league from 1993 to 1998.

Li inspecting a wheat field in Fangguan in north China's Hebei province, June 2022. Photograph: Chine Nouvelle/SIPA/Shutterstock

This led to him being rewarded with governorship of the massive province of Henan in 1998, until then the youngest appointee to such a position. Six years later he was made party boss of Liaoning province, in the north-east.

But the challenges of these semi-developed places meant his record was not an unblemished one. In Henan he was in charge when an HIV-contaminated blood scandal came to national and international attention. Claims of a cover-up and mismanagement were made, with the population of some villages infected by blood transfusions. In Liaoning he managed a major fire disaster in which dozens of people died and were injured in a nightclub amid claims that health and safety regulations had been violated.

Despite these setbacks, Li’s technocratic ability, his reputation for being uncorrupt and his work ethic made him a contender for central leadership. But his fate was sealed when he emerged at the 17th Party Congress in 2007 one place behind Xi in the communist hierarchy. To this day, it is not known how Xi managed to gain the pole position. The ensuing years reinforced the sense that in Chinese politics, the winner takes everything. Li retired at the 20th Congress in 2022, replaced by Li Qiang. Xi, his colleague for a decade, continued in power, despite being older.

Li was married to Cheng Hong, a professor of English who had been a visiting scholar at Brown University in the US in the mid-90s. They had one daughter, who reportedly also studied in the US.

 Li Keqiang, politician, born 1 July 1955; died 27 October 2023

https://www.theguardian.com/world/2023/oct/27/li-keqiang-obituary