China’s Economy Is Terrifying the Middle Class. They’re Sending Savings Abroad.
Rùn (?) is a Chinese word that has had several meanings—“moist,” “to enhance,” “to profit.”
During Covid—when China’s draconian restrictions kept people locked in their apartments or residential compounds—the term took on a new life, meaning to “emigrate in order to flee adverse conditions.”
Now, while Covid has receded in the rearview mirror of most Chinese, the term has gained new life as China’s economy continues its sluggish and people feel increasingly uneasy about their financial conditions.
The superrich have been reallocating funds outside of China for decades, long before President Xi Jinping’s reign and China’s new normal of slower growth. Signs are emerging that even middle-class Chinese have become so worried about the security of their savings that they too are seeking ways—through relatively more difficult conditions—to quietly move funds abroad, often to the U.S., Australia, and the United Kingdom.
Tilly Wang is 44 and lives in her hometown of Chengdu, China, where she freelances as a graphic designer. In an interview, she told Barron’s that she became so insecure about China’s current economic turmoil that she scraped together just enough money to fly to Spain—where she lived in her 30s—to open a bank account for her savings, which she said is about $40,000.
“My friends and I were talking one night in my apartment,” she said, “and the topic turned to our personal finances. When I told them about my plans to fly back to Spain [temporarily], everyone cheered me on. But then they started quizzing me about how they too could move money out of the country.”
Wang said that her friends expressed a lack of confidence in China in a range of areas: the political environment, with Xi into his precedent-breaking third term as supreme leader; the raging youth unemployment rate, now at nearly 20%, which means one in five younger Chinese cannot find work; and in the faltering pension system, which the pre-eminent Chinese Academy of Social Sciences says is set to run dry by 2035.
“Everyone there that night began thinking of ways to get money out [of China],” she said. “The question was how.”
There have been ways to document major financial outflows of the superwealthy—real estate purchases in California or enormous land-grabs in Vancouver or Melbourne. Kashif Ansari, Co-founder and Group CEO of real estate firm Juwai IQI, said that uber-rich Chinese have been offloading capital for years.
“Overseas, Chinese investors are drawn to real estate investment as an easily understood category that’s expected to provide price appreciation and dependable long-term foreign currency income,” he said in a report.
Barron’s recently spoke with half a dozen middle-class Chinese about their attempts to move money overseas because of the country’s uneasy economic and political environment. While united in their motivation to reallocate their savings, each had a different means of doing so.
Allie Xu, who asked that only her English name be used, graduated from a college in southern California just as the pandemic ended. Her family eked out most of their savings to send her abroad, in the hope of a better life and the freedom and security that come with it.
But as China’s economy has stubbornly refused to rebound, their focus narrowed on getting her a green card before her H-1B nonimmigrant visa expired.
“The hope was to get a job, a green card, and eventually buy a home in the U.S., even if it meant my parents selling their apartment [in China],” she told Barron’s in a phone interview.
That plan is stalling and she has now begun looking at a program in Canada that allows Chinese to acquire permanent residence after working for a few years.
“My dad is the most worried” about their family’s financial condition in China, she said. “He wants our savings out, and he seems willing to do anything to do it.” |
