Thursday, March 28, 2013
America: A Top Destination for China's Wealthy
I just read the other day that America is the top destination for China's wealthy people. Wow! You would think that the rich Chinese would want to stay in China because of their growing economy and to be near their businesses but that reason hasn't been the case for the past few years.
The rich are fleeing mainland China because they cite the lack of security of their assets, an unstable authoritarian government, an increasing problem with pollution, food safety, a weak legal system, and a better education for their children as the reasons they want to move to the U.S.. Many are nervous about the government that controls everything related to daily life (including the internet, the media, and print media) and where dissidents against the government are punished severely. Others point to America having an improved quality of life and a place to have more children, getting away from the mainland's one-child policy. Many cite America's superior health care and a school system that readies their children with the necessary skills for the world of work.
Some of the wealthy Chinese point to current Chinese President Xi Jingping as an example of having "one foot on foreign soil" with a daughter at Harvard, an ex-wife in Great Britain, and a sister in Canada.
Now, we are not talking about a few people. CNBC reported that in 2011 over 150,000 wealthy people left the country. The Wall Street Journal saw a huge jump from 787 applications to leave the country in 2009 to more than 2,000 in 2011 to go to America for the EB5 immigration status. An EB5 application gives 10,000 visas annually to wealthy individuals, who will invest $1 million and create at least 10 jobs in the U.S. or invest $500,000 in a rural or high-unemployment area.
China's sudden move to economic power status has a lot of the wealthy nervous that the three decade experiment with capitalism will soon end. China is starting to show some cracks with high inflation, an increase in labor costs, a bubbly real estate sector, and a sharp slowdown in foreign demand.
America is seen as an "insurance policy" for China's wealthy if in the event there is a major uprising in China or if the Chinese government decides to crack down on the rich.
Nice to know that even though we owe China tons of money ($1264.5B as of March 28, 2013); the Chinese elite can see some value in America, unlike some of its own grumpy citizens.