Consultancies see wave of rich seeking to leave China under Xi’s new term

Rich Chinese are considering putting plans to leave their homeland into action as pessimism grows about the future of the world’s second-largest economy under Xi Jinping and the Chinese Communist Party.

Over the weekend, Xi cemented his position as the most powerful leader since Mao Tse-tung, remaining head of the Chinese CP and its powerful Politburo Standing Committee — the heart of the dictatorship’s political hierarchy — for another five years.

After the party congress, the 69-year-old has an unyielding grip on power and virtually the potential to lead the country indefinitely.

David Lesperance, a Europe-based lawyer who has served wealthy families in Hong Kong and China, says Xi extending himself beyond two terms as a leader is a tipping point for China’s business elite, which has thrived for decades as the economy Chinese grew.

“Now that he is firmly in place, I have received instructions from at least three Chinese business families to ‘go ahead’ and execute their ‘fire escape’ plans,” he says.

In the months leading up to the Communist Party Congress, there was speculation that Xi was coming under pressure from the party, which has nearly 97 million members, to abandon controversial policies, including the Covid zero policy, tacit support for Vladimir Putin in the War of Ukraine and the reassertion of subtitle control across the business landscape.

Kia Meng Loh, a partner at Dentons Rodyk, a Singapore-based global law firm that has 6,000 employees in China, says that consultations and instructions for setting up “family offices”—private entities used to manage a family’s wealth— have also been increasing in the city-state for months.

“The clients I work with saw the third term [de Xi] as a predictable conclusion long before this week,” he says. He adds that Hong Kong, long a favorite destination for elite Chinese wealth and families, has become less attractive as Beijing tightens its grip on the territory.

The number of family offices in Singapore quintupled between 2017 and 2019 and then nearly doubled, from 400 at the end of 2020 to 700 a year later, according to Citi Private Bank.

Ryan Lin, director of Bayfront Law, also based in Singapore, says he was approached by five families during the Chinese CP congress last week to create family firms in the territory. Three of the orders are already in progress.

Lin, who set up about 30 such offices in Singapore last year, says most Chinese people he works with expect to move there.

According to Lesperance, many of his clients have spent years preparing to leave China, legally transferring capital to safe offshore jurisdictions and arranging for alternative residencies outside the country and new citizenships for their families.

Rich Chinese, he says, aren’t just worried about rumors of an official wealth tax that would replace informal giving of “common prosperity.” They are also increasingly concerned about personal safety, even after they leave.

Those fears have deepened after a series of temporary or prolonged disappearances of high-profile people in recent years, including Alibaba shopping site founder Jack Ma, tennis star Peng Shuai, elite financier Xiao Jianhua and tennis mogul. Whitney Duan real estate.

“The motto has always been, ‘Keep a fast boat in port with gold bars and a second set of documents.’ The modern equivalent would be a private jet, a few foreign passports and bank accounts,” says Lesperance.

Others, however, seem less prepared. The founder of a US real estate platform for wealthy Chinese said he is struggling to cope with the flood of inquiries as most clients were in a hurry to leave the country and had not planned carefully.

Meanwhile, immigration firms in Shanghai and Beijing have reported an increase in US “green card” applications for people with “extraordinary abilities” as the wait time is shorter than for investment-based residency permits, often used by the ultra-rich.