KUALA LUMPUR (Nov 1): The number China’s uber-wealthy is in decline, while the country’s elites have long looked for ways to take their money overseas, according to a report by the UK Guardian.

In a report on Monday, the newspaper, citing Forbes, said that of the world’s estimated 2,640 billionaires, at least 562 are thought to be in China, down from 607 last year.

It said with crackdowns on financiers and a roiling political climate, many of China’s wealthy are looking to move their money, and themselves, out of the country.

Officially, Chinese individuals are only allowed to transfer US$50,000 (RM238,125) out of the country each year.

But in practice, the wealthy 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.

The Guardian said that 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 100 million yuan.

It cited a state media report quoting the police as saying that “illegal foreign exchange trading seriously disrupts the order of the country’s financial market”.

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 US$19.5 billion 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.

The report said the environment now is a marked shift from the 1990s and early 2000s, when China prepared for entry into the World Trade Organization in 2001 and introduced 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 president Xi Jinping, who has consolidated his personal power more than any leader since Mao Zedong, the emphasis has returned to political control, rather than economic freedom.

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

The report said there are increasing signs of wealthy Chinese decamping to nearby hotspots.

It said 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.

According to immigration consultancy Henley & Partners, about 13,500 high-net-worth individuals are expected to leave China this year, the report added.