Emigration Trend Among Chinese Elites is Worth Examination

Cover Editorial - EO print edition no. 470
Translated by Tang Xiangyang
Original Article:[Chinese]

In most cases, choosing to stay in China or to emigrate is a personal choice that unrelated to public welfare or the country as a whole. If this is the case, why are we still paying attention to the departure of China's elite and the reasons why they are leaving?

There is no authoritative data to support the existence of the trend of the emigration of China's elites. We can only prove its existence by the many interviews we have conducted with people from various fields, researchers and intermediary agency staff members. Recently, hot money, foreign capital entering the country allegedly seeking short-term profits, has become a focus of policy makers; the concern over the exit of capital due to emigration perhaps merely only relates to a small minority of people. However, we still believe that behind the accounts provided by people interviewed, there are clear signs that can not be ignored.

Since China entered the WTO almost ten years ago, the Chinese economy has experienced a decade of fast development, resulting in the rapid expansion of its wealthy class. Currently, with their personal assets growing, the elite in China need to make global investments and seek more investment opportunities while reducing risks. This is a rational decision process, which has parallels with Japan and Taiwan in the 1980s.

We are glad to see China's capital flowing freely around the world, but this flow is not a point of concern; we must examine some other aspects. For example, the political connections required to run a business frequently lead to difficulty, and often impact businesses confidence. Last week, Huang Guangyu, formerly the wealthiest man in China, was sentenced to 14 years in prison for bribery and insider trading. While Huang deserves his punishment, his case still reminds us of some inescapable facts: It is very difficult to operate a successful business in China without the help of government authorities. However, in order to gain this governmental support, committing crimes is unavoidable. Entrepreneurs must keep possession of a bomb whose detonator is controlled by the government.

The recently released new "36 Guidelines" which encourage private investment renewed the confidence of many entrepreneurs, but some still have misgivings. During the past ten years, throughout the maturing of China's entrepreneurial hierarchy, the policies directed towards businesses have frequently changed. Due to the lack of steady expectations, enterprises have had to face a business atmosphere with many variables. Since 2004 when the central government began to regulate and control the macro economy, bold large-scale entrepreneurs have been confined by policies and have suffered from "the advance of the state and the retreat of private capital"; this trend continued when China began to implement its four-trillion-yuan stimulus package in 2008. The repeated implementation of this type of policy has made it impossible for entrepreneurs to know which path for their business to follow. As soon as they make a wrong decision, their enterprises run into trouble.

The rapidly expanding wealth gap has given rise to hatred toward the rich and China's society is becoming increasingly unstable because of its flawed social security system, making people across virtually all levels of society feel insecure. Is it better to take away from the rich and give to the poor to achieve equality, or to make even more people wealthy? Media reports as well as policy signals which indicate the possibility that China may try to bridge the wealth gap by taking from the poor are pushing China's elite to emigrate.

For these reasons, China's private entrepreneurs face the greatest pressures in the world. Though these are not the entire reasons for their widespread emigration and we do not approve of their actions, the departure of China's elite deserves our attention. In an economic system, the higher and more active the accumulation of private capital is, the more vibrant the economy will become and people's living standards will also increase as a whole. This has been confirmed by the results of the past 30 years of China's economic reform and open-door policy. But these past 30 years have also proved that when private capital becomes concerned about an unstable business or policy environment, some sensitive investors will choose to leave.

Departure has not always proven to be a wise choice, nevertheless, when investors repeatedly choose to leave, officials should reflect on the mistakes they have made. China should show the world that it is a rapidly flowing, fountain of wealth. How to establish and run a good market economy and keep government power separate from the market place; how to implement laws to protect property owners; how to create a better business environment and have all social classes live harmoniously together by getting rid of feelings of resentment among classes and providing a voice for appeals... these are all problems that need to be resolved.

All Chinese people desire such a brave new world. In this sense, we are not concerned about the wealthy; this is a warning to China about what it should do as it enters the second decade of the 21st century.