Rich Chinese continue to flee China(cnbc.com)
cnbc.com
Rich Chinese continue to flee China
http://www.cnbc.com/id/101345275
8 comments
Sounds similar to the general sentiment in Russia for the past two decades. The grab and run attitudes are also taking a toll on infrastructure and general business reinvestment. If you are unsure of the future, why invest for the long term?
Based on what I heard and read there were very significant restrictions put in place in recent years that effectively disable the export of the capital from Russia. You still can "grab", bribe, grease and grow rich, but all your money will stay in the country.
I've heard billions go out of Russia every day, the old fashioned way...by train. I'm not sure if its true or not, but cash is kind of portable.
I haven't heard of it. Could you be more specific about restrictions on capital export?
I believe those restrictions won't work when goods and people could move across borders without problems.
I believe those restrictions won't work when goods and people could move across borders without problems.
People in China can't. They have to go through customs, which forbids taking large sums of cash. And you can't electronically move money in or out of China so easily. The banks have restrictions.
There's ways around it. Suitcases full of cash (or gold) which you hope the customs officials won't notice, multiple trips to Hong Kong, junket trips (paying for credit at a casino in Macao, then "withdrawing" through a roulette table). There's probably other ways. Maybe cash in a shipping container?
On the flip side, people outside China want to move money in, and can't. So they get Chinese companies to fake export receipts, pay for the export (officially), then collect the cash from the Chinese company on the other side.
There's ways around it. Suitcases full of cash (or gold) which you hope the customs officials won't notice, multiple trips to Hong Kong, junket trips (paying for credit at a casino in Macao, then "withdrawing" through a roulette table). There's probably other ways. Maybe cash in a shipping container?
On the flip side, people outside China want to move money in, and can't. So they get Chinese companies to fake export receipts, pay for the export (officially), then collect the cash from the Chinese company on the other side.
Bitcoin was a wonderful way to do that for awhile, still happening as well, just less so.
Can't be more specific, sorry. There's a general sentiment that you can pick up by reading news and blogs written by business people - the sentiment that it's hard to impossible to take substantial money out of Russia. If you earn tens of millions dollars and up, you now need to find ways to spend them in Russia. State (read - Putin) has really tightened the valves.
Bitcoins to the rescue.
The regime doesn't respect private property rights (or human ones) consistently, so it's obvious move for an owner and their family to move somewhere that has a more functional legal system and a political class that doesn't demand bribes. (Business in China is a full contact, adversarial sport... even dealing with staff is a bigger hassle than elsewhere.)
The simplest question to ask oneself is: "In what kind of environment would you like your kids to grow up?"
The simplest question to ask oneself is: "In what kind of environment would you like your kids to grow up?"
The article says that in many cases it's exactly the opposite: people who accumulated their wealth by dodgy means are freaking out because the government has started cracking down on the rampant corruption....
Assume you can't take the government's word on what is corruption. How do you distinguish "punishing someone for corruption" from "punishing someone for being rich"?
The rhetoric coming out of the government is exactly the same in both cases.
The rhetoric coming out of the government is exactly the same in both cases.
>Assume you can't take the government's word on what is corruption.
That is a big assumption. The Chinese government is very flawed, but you are wrong in assuming that they would define corruption in a completely arbitrary manner. They would most likely (as they have done already) make an example of the worst, most clear cut, cases.
That is a big assumption. The Chinese government is very flawed, but you are wrong in assuming that they would define corruption in a completely arbitrary manner. They would most likely (as they have done already) make an example of the worst, most clear cut, cases.
I would appreciate an elaboration on why you would give their government the benefit of the doubt on this, when literally every other socialist/communist government on the planet has waged class war through kangaroo court under the guise of 'fighting corruption'?
It's abundantly clear that there's a lot of corruption in China, often involving government officials or those with connections to the government, and much of it really obvious.
The Chinese government hasn't generally cracked down because they were feeling virtuous, but because their hand was forced (corruption was revealed independently), and they feared social discontent more than they feared upsetting the gravy train.
It's certainly believable that they would sometimes use "corruption" as an excuse to persecute those they don't like for political and other reasons -- but they can't just ignore every case of true corruption, especially obvious ones, because they don't want to risk real public unrest.
The Chinese government hasn't generally cracked down because they were feeling virtuous, but because their hand was forced (corruption was revealed independently), and they feared social discontent more than they feared upsetting the gravy train.
It's certainly believable that they would sometimes use "corruption" as an excuse to persecute those they don't like for political and other reasons -- but they can't just ignore every case of true corruption, especially obvious ones, because they don't want to risk real public unrest.
Yes, one of the problems with China seems not only to be that the party is corrupt, and encourages corruption, but that it is immune from investigation and punishment.
I read a book this summer about the Chinese Communist Party (http://www.amazon.com/The-Party-Secret-Chinas-Communist/dp/0...), and was rather surprised to find that the party exists outside of the Chinese legal system. So there's this entire apparatus that cannot, under Chinese law, be investigated, sued, or otherwise held accountable.
I think that it's somewhat inevitable that power without accountability will lead to massive corruption -- all the more so when you're dealing with a country as immense as China, which has accumulated such wealth in recent years.
I find it easy to believe that some wealthy Chinese, unsure of when the party (so to speak) will be over, and when they might be accused (rightfully or not) of corruption, just decide to leave.
I read a book this summer about the Chinese Communist Party (http://www.amazon.com/The-Party-Secret-Chinas-Communist/dp/0...), and was rather surprised to find that the party exists outside of the Chinese legal system. So there's this entire apparatus that cannot, under Chinese law, be investigated, sued, or otherwise held accountable.
I think that it's somewhat inevitable that power without accountability will lead to massive corruption -- all the more so when you're dealing with a country as immense as China, which has accumulated such wealth in recent years.
I find it easy to believe that some wealthy Chinese, unsure of when the party (so to speak) will be over, and when they might be accused (rightfully or not) of corruption, just decide to leave.
China doesn't have a socialist/communist government, they have a technocratic oligarchy that rules via something that calls itself "the communist party".
That's what a socialist / communist government is, a technocratic oligarchy.
The form of government is the same, but the Chinese don't appear to follow the same communist ideology that every other communist government did in the 20th century, or indeed the same ideology that they themselves followed from Mao to Deng.
You hear about "democratic socialism", which is a democratic government that implements socialist policies. China has the opposite: a communist government that implements capitalist policies. Considering the abject failure of 20th century Soviet-style communism, it's not a foregone conclusion that the Chinese will follow that example.
You hear about "democratic socialism", which is a democratic government that implements socialist policies. China has the opposite: a communist government that implements capitalist policies. Considering the abject failure of 20th century Soviet-style communism, it's not a foregone conclusion that the Chinese will follow that example.
Those two possibilities aren't mutually exclusive at all, though.
Unfortunately there is no right answer for such question.
Moving to a country that is advertised of the polar opposite of China is like watching an advertisement of KFC and decided that KFC is better than McD.
Moving to a country that is advertised of the polar opposite of China is like watching an advertisement of KFC and decided that KFC is better than McD.
Switzerland is the polar opposite of China, at least that's my feeling from living in both countries (2 years in the former, 6+ years in the latter).
I don't know. For example many rich people flee France right now, and in some respect it is also because of private property not being safe.
Kids: maybe I'm foolish, I want my kids to grow in China. The air is bad but they will respect their teacher and elders, they will be able to safely walk in any streets, they experience a fast changing and exciting environment, with friendly and welcoming neighbors, and maybe most importantly they will be well equipped mentally and culturally to understand the world all the kids of their generation will have to live in.
All of that is obviously weighting much more than air considerations.
Kids: maybe I'm foolish, I want my kids to grow in China. The air is bad but they will respect their teacher and elders, they will be able to safely walk in any streets, they experience a fast changing and exciting environment, with friendly and welcoming neighbors, and maybe most importantly they will be well equipped mentally and culturally to understand the world all the kids of their generation will have to live in.
All of that is obviously weighting much more than air considerations.
No they're "fleeing" because of a 70% upper marginal tax bracket on person income. And I question how many have actually left, as opposed to saying they totally will.
I seriously doubt France will really miss them, since it's unlikely they paid much of the previous bracket in the first place, and they won't very well stop doing business there.
I seriously doubt France will really miss them, since it's unlikely they paid much of the previous bracket in the first place, and they won't very well stop doing business there.
"No they're "fleeing" because of a 70% upper marginal tax bracket on person income"
Not quite true. "Beyond 500 000 euros in yearly revenue, the maximum tax rate on the revenue is 49 %. The 75 % tax bracket was censored by the Conseil constitutionnel, and is now paid by the companies." [1]
"And I question how many have actually left".
Apparently, it's no so clear.
"The idea that France is experiencing a massive tax exile is widespread in some political circles and sometimes covered in the press, but there are absolutely no tangible proof that such an exile is happening." [1]
[1] - http://decodeurs.blog.lemonde.fr/2014/01/06/the-fall-of-news...
Not quite true. "Beyond 500 000 euros in yearly revenue, the maximum tax rate on the revenue is 49 %. The 75 % tax bracket was censored by the Conseil constitutionnel, and is now paid by the companies." [1]
"And I question how many have actually left".
Apparently, it's no so clear.
"The idea that France is experiencing a massive tax exile is widespread in some political circles and sometimes covered in the press, but there are absolutely no tangible proof that such an exile is happening." [1]
[1] - http://decodeurs.blog.lemonde.fr/2014/01/06/the-fall-of-news...
I don't get this. If the 75% tax is paid by companies rather than individuals, won't the individuals who own these companies still effectively be taxed at this rate? A $1 million tax is a $1 million tax regardlss of whether it is applied when the money hits the company' bottom line or when it hits the owners' bank accounts.
My understanding is this particular tax on high salaries is paid by the employer. Suppose you pay an employee more than 1 million euro yearly, you'll have to pay about 75% tax for everything over 1 million euros. Apparently, this only for 2013 and 2014 and it concerns about 1000 employees, including something like 100 soccer players.
Yes, they flee because they feel their wealth is not safe in France.
And they do, a lot of them.
I do not think France would miss them for the loss in tax income. But I think France should be more welcoming with successful people, and accept that in our world wealth is a marker of success.
And they do, a lot of them.
I do not think France would miss them for the loss in tax income. But I think France should be more welcoming with successful people, and accept that in our world wealth is a marker of success.
"maybe I'm foolish, I want my kids to grow in China"
You make it sound like China is some kind of eldorado whereas your country (France?) is crime ridden with a government that is expropriating his citizens.
If I was to be reincarnated randomly somewhere in China or Europe, I would choose Europe with no hesitation.
"The air is bad but they will respect their teacher and elders, they will be able to safely walk in any streets"
Personally, I think air quality is more of a concern than petty theft.
You make it sound like China is some kind of eldorado whereas your country (France?) is crime ridden with a government that is expropriating his citizens.
If I was to be reincarnated randomly somewhere in China or Europe, I would choose Europe with no hesitation.
"The air is bad but they will respect their teacher and elders, they will be able to safely walk in any streets"
Personally, I think air quality is more of a concern than petty theft.
I'm not taking about petty theft, I'm taking about educational environment. I think growing in a place where you don't feel safe is bad. Feeling secure and building self confidence is the most important for a balanced personality. And feeling safe doesn't mean living in a compound guarded night and day: this would be the worst educational environment.
I think Japan, Europe and China are great in this regard, but U.S. is too violent for me.
I think Japan, Europe and China are great in this regard, but U.S. is too violent for me.
the main religion in china now is money,and children from little age trained for exam,the only thing your child will learn in a chinese school is competition,people are judge by their ability to achieve high point(grade/money), we don't have something called 'education' here,i don't think your children can find a good teacher grown up in such environment
I know that, my kids go to French school mind you
Are the Chinese rich mostly (former) Communist elite members who succeeded on grabbing assets during privatizations or are many of them self made entrepreneurs?
Yes.
The more-content less-joking answer to this question involves things like self-made entrepreneurs whose first dollar came from a $10 million dollar contract from a factory owned by the Chinese army which, totally freakish coincidence time, happens to be run by their dad.
The magic word for Googling about this is "princeling."
The more-content less-joking answer to this question involves things like self-made entrepreneurs whose first dollar came from a $10 million dollar contract from a factory owned by the Chinese army which, totally freakish coincidence time, happens to be run by their dad.
The magic word for Googling about this is "princeling."
"Princelings" are the children of the high ranking communist party members. As they have huge political influence they are probably the polar opposite of what is being described in this article - they are unlikely to leave because they are benefiting from the system not worried about being bitten by it.
On the contrary, communist officials know better than anyone how arbitrary power based on political connections can be and many are buying homes in the US in preparation for any sudden changes in their status. Many of these princelings have prepared escape routes in case the tide turns against them.
Another magic word to Google is "Guanxi," the Chinese version of "networking" in the old-school social sense, but more...intense.
And so it begins, possibly. China has a very big economic adjustment ahead of it; this may well be a sign that the long-delayed change has begun, or is about to begin, in earnest. (I'll refrain from any nautical metaphors here.) All those complacent expectations of the next five years or so of the world economy seem to depend on things being mostly okay in China. I suppose we'll see how that works out.
I'm kind of surprised China allows the money to leave.
But with the air so toxic I don't blame them.
Of course if they are coming to the US, they best avoid the water.
But with the air so toxic I don't blame them.
Of course if they are coming to the US, they best avoid the water.
The water? America has extraordinarily clean water systems overall, among the best in the world in fact. It also has one of the highest renewable water foundations (trailing only Brazil, Russian and Canada). It's also very diverse, some cities are much better than others. The notion that a person moving from China to America would worry about the water is borderline comical.
Most of America's cities have an overly abundant supply of clean drinking water. Those that don't are almost always situated in a desert.
Most of America's cities have an overly abundant supply of clean drinking water. Those that don't are almost always situated in a desert.
I'm pretty sure that statement was tongue-in-cheek, given the recent water woes in West Virginia.
Not just West Virginia, lots and lots of places because the infastructure is wearing out and regulations either don't exist or are being ignored.
Anywhere there is gas mining, Hawaii, etc.
https://www.google.com/search?q=water+pollution+-virginia&tb...
Just because it doesn't make national news, doesn't mean something really bad isn't happening, there is a ton of gun violence in Chicago every week and the national news ignores is.
Anywhere there is gas mining, Hawaii, etc.
https://www.google.com/search?q=water+pollution+-virginia&tb...
Just because it doesn't make national news, doesn't mean something really bad isn't happening, there is a ton of gun violence in Chicago every week and the national news ignores is.
Water in China isn't potable in general. We laugh at your west virginian river water contamination with the Songhua.
I'm not completely familiar with the current state of affairs on how freely RMB can leave the country, but even when there were strict controls in the 80s and 90s (you had to have receipts of USD being changed into RMB to change any RMB back to USD, and couldn't exceed what you put in) it was relatively straightforward to get money out of the country.
Consider - an acquaintance started a western car dealership which he ran successfully for years, then sold. Flush with lots more RMB than he had invested in USD, he simply created a quality building supply exporting company which sold Chinese building supplies (like marble) in USD to US customers, while purchasing them in country with his RMB. He also built his house with these building supplies. In a year or so, all of his RMB was used up, and that was that.
This was a relatively "small business" owner compared to the kinds of tycoons we're talking about in Russia and China. Replicated this on a larger scale would be trivial, even if there were rules about it.
Consider - an acquaintance started a western car dealership which he ran successfully for years, then sold. Flush with lots more RMB than he had invested in USD, he simply created a quality building supply exporting company which sold Chinese building supplies (like marble) in USD to US customers, while purchasing them in country with his RMB. He also built his house with these building supplies. In a year or so, all of his RMB was used up, and that was that.
This was a relatively "small business" owner compared to the kinds of tycoons we're talking about in Russia and China. Replicated this on a larger scale would be trivial, even if there were rules about it.
Exactly
As governments tighten their control, there are several "creative" ways of sending money abroad being created every day.
As governments tighten their control, there are several "creative" ways of sending money abroad being created every day.
Canada and Australia stay the most popular destination for corrupted officials from China, while U.S. may see some rich businessmen.
ahh yes, one of those china stories where only bad news is the politically correct / accepted news.
http://www.economist.com/news/finance-and-economics/21594345...
http://www.economist.com/news/finance-and-economics/21594345...
As opposed to within China where only good news is politically correct.
http://www.chinadaily.com.cn/china/
http://www.chinadaily.com.cn/china/
The rich have always been above the concept of nation from at least when Florence and Genoa began to decline in the renaissance abd the rich Italians emigrated to France
Officials with spouses overseas won't be promoted
http://www.chinadaily.com.cn/china/2014-01/17/content_172403...