Millionaire Emigration: The Allure of Investor Visas among China’s Elite
In the past decade, immigrant investor programs—which offer wealthy foreigners permanent or temporary residence in exchange for a sizeable, job-creating investment—have proliferated around the world. While these programs attract foreigners from many countries, Chinese applicants have dominated in Australia, Canada, the United States, and some European countries such as Portugal. In fiscal year (FY) 2015, about 90 percent of those getting a green card through the U.S. EB-5 investor visa program came from China.
As the number of immigrants interested in what critics view as “cash for citizenship” has grown, so has scrutiny of the programs they are using to secure prized residence in key destination countries. The EB-5 program, for example, has been persistently criticized for failing to bring promised economic revitalization to struggling regions, and instead simply allowing millionaires to buy green cards.
The controversy is not limited to the United States: Responding to domestic concerns, Australia overhauled its program to be more restrictive and maximize economic payoff, while Canada shuttered its national program. Still, the allure of the “golden visa” remains strong among China’s elite class.
Why do well-heeled Chinese tend to migrate, availing themselves of investor visa programs and other channels, even as China is experiencing rapid economic development? How does the public view the exit of their country’s elite? What are the economic and political consequences of this migration, and is it likely to continue? Based on surveys of wealthy Chinese and media reports, this article addresses these questions and others regarding the phenomenon of Chinese investment migration.
Flight of the Rich? Numbers of Wealthy Chinese Abroad
While outflows were relatively small before 2011, Chinese investment emigration started to grow dramatically after this point, drawing media attention. Nearly two-thirds of well-to-do individuals in China surveyed in 2014 had either participated in investor visa programs or considered migration, according to a report by Hurun Research Institute that surveyed 458 Chinese with assets of at least 10 million yuan (US $1.5 million). Many in China perceive that most of their rich countrymen have left, or plan to leave.
However, the actual number of Chinese who migrate via investment channels is far smaller than perceived. About 9,000 Chinese millionaires migrated to other countries in 2015, second only to the French (10,000), and ahead of Italians (6,000) and Indians (4,000), according to a report from the consultancy firm New World Wealth. Not all millionaire migrants use investor visa channels, and these figures might not be comprehensive since some governments do not release regular statistics on their investor immigration programs. However, most Chinese millionaires prefer to migrate via investment programs as it is the easiest and quickest way for them to move abroad.
Regardless, the emigration rate of Chinese millionaires is comparatively low, representing a small share of rich Chinese. Of the 654,000 millionaires in China in 2015, according to New World Wealth, just 1.4 percent left the country that year. Meanwhile, the annual emigration rate of millionaires in both France and Spain reached 2 percent, and as much as 5 percent in Greece. It should also be noted that the more wealth a Chinese resident has, the more likely he or she is to migrate: About one-third of those whose assets exceed 100 million yuan (US $15 million) have obtained immigration status abroad, a much higher rate than for all millionaires, according to the Hurun report.
Box 1. An Overview of Top Investor Visa Programs
While many countries offer some type of investor immigration benefit, these programs vary considerably in the type or amount of necessary investment, residency requirements, and the rights provided to the investor in turn. Below is a selection of different programs and their characteristics.
- United States: The EB-5 program offers lawful permanent residence to immigrants who invest at least US $1 million (or $500,000 in high-unemployment or rural areas) in commercial enterprises, creating or preserving at least ten jobs.
- Australia: The Business Innovation and Investment visa (subclass 188) allows selected foreign business owners or entrepreneurs to live and work in Australia for four years, in exchange for an investment of at least AU $1.5 million (US $1.2 million).
- Canada: While Canada ended its national program in 2014, a provincial program in Quebec offers residency to investors who invest CA $800,000 (roughly US $653,000) with an approved financial intermediary.
- Portugal: Under Portugal’s Golden Visa program, investors who purchase a property worth at least 500,000 euros (US $600,000) are eligible for a renewable five-year visa. If they meet residency and other requirements, they could eventually qualify for an EU long-term resident permit.
- St. Kitts and Nevis: Home to one of the first citizenship-by-investment programs, St. Kitts and Nevis offers citizenship in exchange for an investment of US $250,000 or $400,000 in an economic diversification project or real estate development, respectively.
Sources: U.S. Citizenship and Immigration Services, “EB-5 Immigrant Investor Program,” accessed September 18, 2017, available online; Australia Department of Immigration and Border Protection, “Business Innovation and Investment (Provisional) Visa (Subclass 188),” accessed September 18, 2017, available online; Canada Immigration and Citizenship, “Immigrant Investor Venture Capital Pilot Program,” updated July 6, 2017, available online; Portugal Immigration and Borders Service, “Golden Residence Permit Programme,” accessed September 18, 2017, available online; St. Kitts and Nevis Citizenship by Investment Program, “Investment Options,” accessed September 18, 2017, available online.
Official host-country statistics show wealthy Chinese abroad represent around 4 to 6 percent of all rich Chinese—far lower than the 60 percent often cited in Chinese media. Because China produces many more new millionaires than it loses, the outflow is not particularly concerning for its economy, as the New World Wealth report points out. Millionaires in China grew at a staggering rate of 23 percent between 2014 and 2016, though this is expected to slow in 2017, according to Bain Consulting and China Merchants Bank.
The United States is the top destination for well-off Chinese. Approximately 30,000 Chinese investors and relatives arrived via the EB-5 program between 1992 and 2014. The rate surged in 2015 and 2016, when 15,000 migrated using the program. Taking into account governmental statistics that suggest another 40,000 to 50,000 Chinese investor migrants and family members moved to three other major destinations—Hong Kong, Canada, and Australia—the total population of Chinese investor migrants could be as large as 85,000 to 90,000.
In recognition of Chinese interest in investor visa programs, some countries have targeted China either explicitly or implicitly when crafting their policies. Australia launched temporary and permanent investor visa schemes, called subclass 188 and 888 respectively; the number eight is associated with wealth and prosperity in the Chinese culture. About 90 percent of visa applicants between 2012 and 2015 were Chinese.
Explaining Millionaire Migration
The exit of Chinese millionaires seems perplexing at first glance. While the growth in private wealth must be a precondition, this factor on its own is not enough to explain the outflow.
Some American observers have used growing millionaire migration as evidence of China’s coming decline, including China expert David Shambaugh, author of a sensational March 2015 article in the Wall Street Journal suggesting emigration of the Chinese elite is a canary in the coal mine, predicting an impending domestic crisis.
On the other hand, 430,000 recent university graduates returned to China from abroad in 2016, according to the Chinese Ministry of Education. Unlike some top migrant-sending countries, China is not experiencing economic decline or political instability; in fact, it has maintained an annual GDP growth rate of more than 6 percent since 2011—high compared to top destination countries in the West. China has actively wooed its skilled diaspora through a variety of programs, and Chinese returnees pursue professional development and entrepreneurial opportunities in their home country, indicating the overall attractiveness of living and doing business in China.
If this is the case, what could be driving the economic elite to leave? Some Chinese scholars blame government policies. Ren Jiantao, a professor at Tsinghua University, criticized Chinese regulation of private capital as overly restrictive. Indeed, some entrepreneurs might have serious concerns about their asset security and use immigration documents as a form of insurance against possible political or financial upheaval, but it is probably not the major reason behind their emigration. Just 6 percent of Chinese millionaires surveyed by Visas Consulting Group in 2014 listed protection of assets as a factor in their migration. On average, overseas investments represent 16 percent of the total assets of Chinese millionaires, and just 5 percent of them transferred half or more of their assets abroad.
Like other kinds of migrants, wealthy Chinese prefer to move for a better and more comfortable lifestyle. The top three reasons for migration given by 141 respondents to the Visas Consulting Group survey were quality of education, environmental pollution, and food safety. Nearly 40 percent of rich Chinese said they view education as the main reason for overseas investment, according to the Financial Times. Children with lawful status in the host country are more likely to be admitted into prestigious high schools or universities. Some wealthy Chinese even buy apartments in college towns for their children.
The Role of Social Status
Emigration of Chinese millionaires is also driven by the importance of social status in Chinese culture. When high-income Chinese buy luxury goods, they not only care about the usefulness of their purchases, but also want to burnish their image with public displays of wealth. Millionaires are often ridiculed as tuhao, or provincial upstarts, and are eager to replace this negative perception with a more respectable one—through cultural refinement, in addition to material wealth.
The quickest way for Chinese millionaires to achieve this is to keep the pace of lifestyle with their Western counterparts. Gracia Liu-Farrer, a professor at Waseda University in Japan, argued in a research paper, “What can counter the image… [of provinciality] better than its direct opposite—overseas?” She pointed out that the migration of Chinese millionaires represents a form of class-based consumption and an important means of “converting economic resources into social status.”
After the richest first pioneered obtaining permanent residence in a desirable host country, the less-rich followed, to avoid losing in the status competition. As the manager of one New York-based immigration firm observed, “… [my Chinese] clients had over the years changed from large business owners with more than 100 million yuan in assets to small bosses and corporate executives who make 1 million yuan a year.” In short, Chinese investment migration is not a symptom of development problems, but rather a sociocultural byproduct of the development process itself.
Another piece of evidence further supporting the argument of status as a driver of emigration: Many Chinese millionaires do not live abroad, instead opting to “immigrate and stay home.” They continue to run their businesses in China after gaining a prized green card or other residence permit. Wealthy Chinese tend to be less familiar with foreign markets or job opportunities, and their business expertise cannot be fully utilized abroad. They also face language and cultural barriers. As the Financial Times noted in 2015, respondents listed “lack of knowledge about foreign regulations and markets” as the second and third most significant problems associated with overseas investment. It is easier for Chinese businesses to turn a profit at home, where markets are less mature than in the industrialized world.
The business of wealthy Chinese, in essence, is largely confined to China, and over the short term they are unlikely to leave permanently. Their main goals in applying for foreign visas are to facilitate the education of their children at respected overseas institutions and make international travel more convenient. As a result, these millionaires often allow their family members to be the principal applicants, in order to avoid the required duration of residence. Others apply for visas from host countries with less demanding requirements, primarily for easier access to other countries, according to a 2014 Migration Policy Institute (MPI) report.
Perception and Impacts of Investment Immigration
As mentioned, the flow of investment migration is greatly exaggerated in Chinese media. Dramatic headlines declare that “Investment Immigrants Dominate the Third Wave of Emigration from China,” following earlier waves of international students and laborers. In reality, investment migration accounts for a small fraction of all emigrants from China—hardly a wave. For instance, in FY 2014, roughly 76,000 Chinese migrants to the United States obtained green cards, of whom just 9,000 did so via the EB-5 investor visa program.
With just a handful of China’s elite able to enjoy de facto freedom of migration, many more would like to move abroad than can realistically do so, according to a Gallup survey. Potential migrants far outnumber those who actually go abroad, and those who remain have kept emigration a hot topic in recent years.
While the discussion surrounding emigration tends to be highly polarized, owing to growing social inequality and rampant political corruption, both the right and the left view elite emigration negatively. Those on the right tend to blame China’s policies for not being conducive to entrepreneurial activities and protection of assets. In contrast, Chinese commentators on the left perceive wealthy emigrants as corrupt officials and businessmen, and criticize their departure as unpatriotic by causing an outflow of illegally obtained wealth. Such cases do exist, but most investor migrants acquire their assets via return on investments, profits, and earned income, according to the Visas Consulting Group. In addition, host-country immigration agencies scrutinize applicants’ financial backgrounds, rejecting those who cannot adequately explain the sources of their assets.
Some commentators view investment migration as a form of brain drain, or movement of valuable human capital out of the country, considering China has lost some of its most competent managers and professionals to emigration. While national economic growth is slowing, few economists would view investment migration as a significant contributor.
In fact, the exit of Chinese millionaires has more political than economic consequences. Some may think intuitively that the departure of members of the business elite would reduce political pressure on the national government. Migration gives wealthy Chinese as an interest group the option to collectively “vote with their feet” against the government. Borrowing terms from economist Albert Hirschman’s book, Exit, Voice, and Loyalty, the exit of well-to-do Chinese—particularly the richest—makes their voice louder and gives them more bargaining power over domestic policymakers. In response, the Chinese government has downplayed this migration in state media, and several famous entrepreneurs have publicized their decisions to stay in China. For example, Alibaba founder Jack Ma, the richest person in China, announced that he would not emigrate out of love for his hometown.
“Golden Visa” Shine Wearing Off?
With growing calls to restrict overall immigration levels in a number of top destination countries combined with controversies surrounding “golden visas,” investor visa programs are likely to continue becoming more selective. In the United States, the EB-5 program has been criticized for straying from its original purpose to transfer foreign investment to rural and urban poor areas with high unemployment, with critics deriding policies permitting EB-5 investment in well-heeled Manhattan, for example. Allegations of insider coziness and political favoritism have also long dogged the program. These allegations were fanned anew earlier this year when a sister of Jared Kushner, son-in-law and top adviser to U.S. President Donald Trump, came under fire for dropping her brother’s name during a sales pitch in Beijing to lure Chinese investors to provide financing for an EB-5-linked Kushner housing development in New Jersey.
Policymakers have long targeted the EB-5 program for reform, and an immigration bill introduced in the U.S. Senate in August 2017 proposed eliminating it entirely. Beyond investor visa crackdowns in Australia and Canada, Portugal relaunched its program with new restrictions following a 2014 corruption scandal, and in the United Kingdom, a fraud case revealed 3,000 wealthy foreigners entered via the investor scheme without Home Office checks. Singapore also raised the investment threshold due to concerns of the scale of immigration.
As well-to-do Chinese regard Western culture, education, and environment to be superior to their own, investment migration will likely continue in the coming years. With demand remaining high in China, the only limitations on the flow will be conditions and restrictions in destination countries. Chinese policymakers, media, and observers should view this phenomenon as a normal side effect of development—one which will fade only when China as a nation fully ascends to the world’s cultural elite.
China Merchants Bank. 2011. Private Asset Report in China (In Chinese). Shenzhen: China Merchants Bank.
Clifton, Jon. 2012. 150 Million Adults Worldwide Would Migrate to the U.S. Gallup, April 20, 2012. Available online.
Financial Times Confidential Research. 2015. The Fourth Wave: China’s Wealthy Investors Go Global. FT Confidential Research, July 30, 2015.
Griffin, Drew and Curt Devine. 2017. Exclusive: Jared Kushner’s White House Connection Still Being Used to Lure Chinese Investors. CNN, July 21, 2017. Available online.
Hirschman, Albert O. 1970. Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States. Cambridge, MA: Harvard University Press.
Hurun Research Institute. 2014. Brand Preference Report of Chinese Millionaires (In Chinese). Shanghai: Hurun Research Institute.
Invest in the USA (IIUSA). 2016. EB-5 Investor Markets Report. Washington, DC: IIUSA. Available online.
Kopan, Tal. 2017. How to Earn 'Points' to Come to the U.S. under Trump's Immigration Plan. CNN, August 2, 2017. Available online.
Liu-Farrer, Gracia. 2016. Migration as Class-based Consumption: The Emigration of the Rich in Contemporary China. The China Quarterly 226: 1-20.
New World Wealth. 2016. Millionaire Migration in 2015. Johannesburg, South Africa: New World Wealth. Available online.
Shambaugh, David. 2015. The Coming Chinese Crack-up. Wall Street Journal, March 6, 2015.
Sumption, Madeleine and Kate Hooper. 2014. Selling Visas and Citizenship: Policy Questions from the Global Boom in Investor Immigration. Washington, DC: Migration Policy Institute. Available online.
Taikang Life and Hurun Report. 2015. White Paper on China HNWIs’ Medical Treatment and Healthcare. Beijing: Taikang Life and Hurun Report. Available online.
Visas Consulting Group. 2014. White Paper on China’s Investment Immigration. (In Chinese) Beijing: Visas Consulting Group.
Xie, Lei. 2014. Ma Yun: Good to Live in Hangzhou, Will Not Immigrate. Shanghai Morning Post, September 18, 2014. Available online (in Chinese).
Yuan, Xunhui. 2016. How Can China Retain Its Elite Residents – An Interview with Ren Jiantao. (In Chinese) Consensus, August 5, 2016. Available online.
Zeng, Jennifer and John Ott. 2017. China’s Private Wealth Machine. Bain & Company, July 25, 2017. Available online.