Rich Chinese people escape crackdowns for Singapore, dubbed “Asia’s Switzerland”

Some residents are uneasy as Chinese riches pours into the Southeast Asian city-state.

Bao Fan, one of China’s most well-known investment financiers, was said to have been searching for a secure location to store his riches before going missing in the middle of February.

The Financial Times reported last month, citing four individuals familiar with the plans, that Bao, the creator of China Renaissance, was creating a private asset management firm in Singapore to move money out of China and Hong Kong.

Bao is just one of an increasing number of rich Chinese businesspeople who have turned to Singapore, known as the “Switzerland of Asia,” to avoid Beijing’s crackdowns on the private sector and graft. Bao has joined a lengthy list of important businessmen who have mysteriously vanished in China.

Under the condition of secrecy, a wealth manager at a Singaporean bank with a sizable Chinese customer told Al Jazeera that “wealth has flooded into Singapore from China and Hong Kong in recent years.”

According to the wealth manager, “in private conversations, many of them have cited the disappearances of Chinese businessmen as well as the uncertain economic times as the main reasons for moving money out of China.”

Since the ascent of Xi Jinping, China’s most powerful leader in decades, who has guided his country in an increasingly authoritarian and nationalistic direction, Singapore, named the world’s best place to do business by the Economist Intelligence Unit, has developed a reputation as a haven for high-worth Chinese.

More than 100 senior Chinese Communist Party leaders, as well as tens of thousands of lower-level officials and businesspeople, were charged with white-collar offenses in the first five years of Xi’s anti-corruption campaign.

More lately, money has started to leave China due to a governmental assault on private industry that has affected industries like computing, education, and real estate.

According to a supervisor at a major international bank with branches in Singapore, who spoke to Al Jazeera on the condition of anonymity, “My clients have told me that in the current political climate in China is less tolerant towards affluent people compared to before, and therefore they wanted to get their assets out.”

“In the past, Chinese investors would have looked to Hong Kong, but due to the city’s years of instability and economic decline, it is no longer as appealing as it once was as an investment destination.”
Simply put, Chinese investors are looking for “better opportunities abroad” as China is becoming a “less attractive country to invest in,” according to Sara Hsu, a University of Tennessee specialist on Chinese technology and shadow finance.

Large sums of money can be difficult to transfer out of China, but many people have succeeded, according to Hsu.

The city-state of Singapore has felt the effects of the large inflow of Chinese capital very strongly.

Nearly a quarter of the 425 opulent houses sold in the city in 2022 were purchased by mainland Chinese purchasers, who outnumbered Americans by a ratio of more than two to one.

According to data from real estate consultancy firm Knight Frank, Singapore’s residential real estate prices increased by 14% in 2022, while prices in other cities with historically active real estate markets, like Sydney and Hong Kong, declined by a small percentage. Analysts have claimed that domestic factors, rather than wealthy foreigners, are what have driven the rising prices.

Chinese citizens who cannot purchase real estate in Singapore have chosen to rent instead, which has caused the annual leasing costs of some upscale properties to more than triple.

The Straits Times newspaper reported that from January 2022 to January 2023, renting costs rose by 33.2% throughout the city-state.

In Singapore’s wealth management industry, a barrister last month predicted that from 700 offices to 1500 offices, the number of wealth management offices would more than double in 2022, with roughly half of them coming from China.

For outsiders, a membership at the Sentosa Golf Club has doubled in price to 880,000 Singaporean dollars ($660,000) on the popular Sentosa island, which is off the southern shore of Singapore’s main mainland.

According to the boss at the major foreign bank who spoke on the record under the condition of confidentiality, “you also notice that there are a lot more Chinese in the cityscape compared to just a few years ago.”

You can hear dialects from Hong Kong and the Mainland China everywhere you go.

Sales manager Emma Chiu has also observed an increase in mainland Chinese residents in Singapore over the past few years.

Chiu told Al Jazeera, “My friends and I often discuss how we see all these Chinese mainlanders traveling around in large, costly vehicles, dressing in the newest designer labels, and eating at all the upscale establishments.

Although some of the Chinese’s displays of wealth are a little too showy for my tastes, I suppose that is part of what makes them interesting to watch.

According to the wealth manager who spoke on the condition of anonymity, the influx of affluent Chinese from the Chinese peninsula into Singapore shows that they are concerned not only with protecting their investments but also their families.

Singapore has a global investor program that entitles foreigners who contribute a minimal sum in the nation to perpetual citizenship for themselves and their families.

The wealth manager explained, “So by storing their assets here, they can safeguard both their riches and their lives from a possibly unstable political situation in China or Hong Kong.

Singapore has a lot to offer wealthy visitors wanting protection for their possessions and themselves.

The city-state has long offered banking and financial management services to affluent people from around the globe as a reliable tax refuge.

Singapore has served as a model of security ever since it gained freedom in 1965. Even though it does so in a country where most forms of dissent are essentially banned and where media freedom is among the least respected, the People’s Action Party has had one of the greatest periods of continuous rule in history.

The gross domestic product (GDP) per individual is over $72,000, ranking among the best in the world, and crime and misconduct are at historically low levels.

Singapore is also near to home, both physically and culturally, especially for people from the Chinese peninsula. The majority of Singapore’s populace, which is culturally Chinese and shares the same time zone as China, speaks Mandarin fluently.

The movement of resources and people from China to Singapore, however, might not continue.

At the Danish Institute for International Studies, Yang Jiang is a top scholar who studies the political economics of China today. If the capital flight persists, she said, Chinese officials may try to strengthen their already strict capital controls even more.

“If many businessmen leave China, it might appear that there is a Chinese brain drain,” said Jiang.

And because China depends on these private people to keep its market vitality, the government would want to impede that growth.

Additionally, not everyone in Singapore is happy about the influx of foreign riches.

Although a significant portion of Singapore’s property stock is by law restricted to Singaporeans, shielding a sizable component of the market from foreign purchasing, the inflow of cash has been felt in other areas.

Chiu said, “I have heard tales of lunatic spending binges by recently arrived mainlanders.

Additionally, I personally notice that when I want to buy these days, items are either much more costly or already sold out, which I believe is related to the amount of foreign currency that is currently flowing through the city.

Sean Feng, a teacher, claimed that the steep rises in grocery costs have made it difficult for him and his family to make ends meet.

Singapore receives more than 90% of its food, making it susceptible to outside pressures. The Department of Statistics in Singapore reports that the price of food increased by more than 8% in January and February, which is considerably greater than the rate of inflation in general.

One of the highest in Southeast Asia in February, Singapore’s core inflation rate of 5.5 percent was more than twice as high as that of other established Asian countries like Hong Kong, Japan, and Taiwan. Singapore and New York City were designated the most costly cities to reside in by the Economist Intelligence Unit in December.

Feng told Al Jazeera that “a lot of everyday items are a lot more expensive now.” “I know that inflation has been a problem everywhere over the past few years, but when so many people with so much money move here, it is sure to make things worse for us,” the speaker said.

I just hope Singapore can be a haven for everyone who calls the city home, rather than just a location for the extremely wealthy, Chiu said.

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