US Tops the List as Half of Chinese Millionaires Look Overseas

The Chinese government’s tightening grip on cross-border capital flows isn’t stopping many of the nation’s high net worth individuals (HNWIs) from heading abroad in search of investment opportunities, better school systems and cleaner air.

The US remains the destination of choice for wealthy Chinese for the third year in a row, followed by Canada, the UK and Australia, according to a recent survey by China’s Hurun Research Institute in partnership with legal services shop Visas Consulting Group. Education and pollution topped the list of motivations, with 76 percent and 64 percent of people respectively choosing these as reasons to emigrate.

In a sign of the rising aspirations of China’s moneyed elite, 53 percent of respondents chose the desire for ideal living circumstances as a motive to move abroad. Medical care was a factor for 29 percent of survey-takers.

800K Millionaires Want New Homes

Conducted from April to July this year, the survey polled 304 Chinese with an average wealth of RMB 20 million ($3 million) across key cities nationwide. Although the survey focused on mainlanders who have already emigrated or are planning to do so, a separate report by Hurun this past January found that almost half of Chinese “millionaires,” defined as people with a personal wealth of RMB 10 million ($1.4 million), were considering emigration.

This marks a record low, after a decade in which the number of well-to-do Chinese looking to pack their bags has hovered at around 60 percent. Even with a dropping percentage, however, the “millionaire” category in China now includes about 1.6 million people.

Overwhelmingly, these would-be emigres are setting their sights on the English-speaking world. The latest survey reveals that the most popular cities for investment emigration and property buying were Los Angeles, Seattle, San Francisco, New York, Vancouver, Boston, Melbourne, Toronto, New Zealand and Sydney, in descending order. Seattle, on the rise every year, surpassed San Francisco for the first time this year.

Capital Controls Putting a Damper on Overseas Buying

Despite their enthusiasm for bagging houses in prosperous neighborhoods far from China, mainland emigres are finding it increasingly challenging to get their money overseas. China’s banks began ramping up scrutiny on foreign currency exchanges in 2015, and at the end of last year, the government issued strict rules banning Chinese from purchasing foreign currency to invest in overseas real estate, insurance and stocks.

The stronger curbs have contributed to a slump in Chinese home purchases in places like Southern California, where the phenomenon of Mandarin-speaking buyers making all-cash offers for luxury houses has noticeably subsided in the last couple of years.

These challenges notwithstanding, only 20 percent of HNWIs chose tightening foreign exchange controls as their main concern in regard to overseas financial investment. By contrast, 37 percent cited lack of knowledge of foreign markets as their main issue.

Fully 84 percent of respondents were worried about the devaluation of China’s currency, up 50 percent over last year. Although 60 percent of those queried said they thought home prices would continue to rise in China, and 60 percent expressed optimism about the country’s economy over the next three years, nearly half said they were concerned about domestic properties bubbles, foreign exchange controls, and the yuan’s exchange rate.