Have money, will migrate

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 At the same time, investment immigration policies in countries have become more favorable to attract Chinese investors.

That many of the foreign programs require a substantial investment by applicants, either in real estate or businesses, is seen as a sign that the US and Europe need the injection of capital in enduring instability caused by the global economic crisis.

And to oblige, China's rich have recently been on shopping sprees in both regions, snapping up homes, considered the first step to gaining a passport.

Cyprus introduced a new immigration policy at the end of 2011, allowing a person who buys a house in Cyprus of a certain value to apply immediately for a residence permit.

The recently renewed US program, EB-5, which can grant up to 10,000 visas annually, requires $1 million in businesses that create at least 10 jobs in the US or an investment of $500,000 in a rural or high-unemployment areas.

Yvonne Liu, 22, who wants to stay in the US after her college studies, fits the profile. Her mother, Lily Zhang, a 46-year-old Chinese businesswoman, can make that happen.

Three years ago, Zhang flew to the US to look for investment opportunities. Her plan was to move some of her international trade business from Xiamen in China's southern Fujian province to southern California.

"It will create at least 700 jobs for locals," Zhang says. With California's unemployment rate above 12 percent, she found it an ideal time to invest in an American dream for her daughter.

More than a third of the $70 million investment can be raised through a quota of 50 EB-5 investor visas for other Chinese who can pay a minimum of $500,000 for permanent residence.

Last year, the investment immigration of Zhang Lan, head of a famous restaurant chain, South Beauty, created controversy in China.

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Many accused Zhang, also a former member of the Beijing Chaoyang District Committee of the Chinese People's Political Consultative Conference, of being unpatriotic. But Zhang was quoted on the state television network as saying it had nothing to do with the patriotism. It was simply easier for the company to go public overseas if she held foreign citizenship, she claimed.

Her sentiments are common among China's wealthy elite. Many cited environmental and social concerns, such as pollution, corruption and distrust among people, as well as a rigid investment environment, for motivating this trend.

"Public opinions are always associated with confidence about China's future or the rich escaping from something illegal they have done," wrote Huang Song, secretary-general of the Finance Industry and Development Research Center of Peking University, in a recent commentary for Caixin.com, the website of one of the largest media groups in China.

"But there is another very important reason which is neglected - that is the government's restriction and barrier to overseas financing and investment.

"China's financial system essentially only supports state-owned enterprises and large firms. For private companies and small and medium-sized enterprises, it is difficult to get loans, and even more difficult to go public or issue bonds."

Another study, conducted a few years ago, revealed that 80 percent of China's wealth is held by 20 percent of the population.

"The private economy contributes more than 60 percent of China's GDP and it absorbs a majority of employees," says Wang Huiyao, director of the Center for China and Globalization. "So if private business owners emigrate with their capital, it would mean less investment in the domestic market, and fewer jobs would be created."

Investment immigration also hits less developed areas harder than big cities because economies in those areas are mainly bolstered by the private sector, he says.

The Economic Observer, a weekly Chinese newspaper, finds it ironic that after three decades of rising prosperity, those who have benefited most from the country's economic growth are leaving, taking money and skills with them.

"It is not reasonable, nor in the national interest of any country, that individuals who have benefited from the favorable overall conditions to create wealth in a country should then take the fruits of these benefits abroad rather than aiding the country in which that wealth was created," says John Ross, a senior fellow at Chongyang Institute for Financial Studies of Renmin University of China and former director of economic and business policy for the mayor of London.

In an attempt to prevent a "wealth drain", he suggests following the US's example.

He says the US introduced an "exit tax" in June 2008 for American citizens with a net worth of more than $2 million.

"China is a developing country, without the same accumulated stock of wealth as the US, and therefore withdrawals of wealth are more damaging," Ross says.

CCG director Wang says the solution is to develop more sustained economic development and improve the quality of life.

"China is facing the dual challenge of modernization and globalization," Wang says. "It is impossible in a short time to eliminate the various problems and contradictions in the economic and social development.

"Besides, it is human nature to pursue a more stable and comfortable life. Only by making the country more attractive to its talent can it slow down the trend."

But Oliver Barron, head of NSBO's Beijing branch, a UK-based investment bank with offices in Beijing, says: "Gone are the days when the main focus in China is domestic wealth creation.

"Chinese investors have matured and are now more focused on wealth preservation, which is a natural step in China's evolution and one which should be embraced."

Contact the writers at lvchang@chinadaily.com.cn and zhangchunyan@chinadaily.com.cn

(China Daily 03/15/2013 page12)

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