When Chinese President Xi Jinping assumed a historic third term at the head of the Communist Party of China, he proclaimed that he would regulate the wealth accumulation mechanism. No details were given.
According to the Wall Street Journal, many suspected that the 69-year-old leader intended to redistribute income from the wealthy to the rest of society. Xi’s speech also mentioned raising the incomes of low-income earners and upgrading the middle class.
Many translated the vague language as a signal for more taxes. As the WSJ reported, economists expect a property tax, which could be introduced as early as next year.
Dan Wang, chief China economist at Hang Seng Bank 恒生银行, said the tax would help local governments swell their budgets, which have been hit since land sales slowed.
According to the South China Morning Post, Southwest Securities analysts Ye Fan and Wang Runmeng noted that housing is the main form of household wealth in China. They expected Beijing to launch a capital gains and inheritance tax or expand the scope of the levy.
Alicia García-Herrero, chief Asia-Pacific economist at Natixis, believes Beijing may be considering a policy change. She specified stricter oversight of wealthier individuals and companies. This could serve as an incentive for greater financial contribution to state objectives.
Xi’s speech nonetheless jolted the rich Chinese. Europe-based attorney David Lesperance told the Financial Times that high-net-worth persons in the country were also worried about their safety.
More high-profile Chinese have either temporarily or permanently vanished from the public eye in recent years. Such examples are real estate billionaire Whitney Duan, Alibaba founder Jack Ma, tennis player Peng Shuai , and elite financier Xiao Jianhua.
David Lesperance recommended keeping “a private jet, a couple of passports and foreign bank accounts.” He is a lawyer who has worked with wealthy families in Hong Kong and China. He added, “That is the world we are in . . . it is tough stuff.”
At present, the direct result of Xi’s speech is a flood of the ultra-wealthy seeking to flee their homeland. The Financial Times reported that immigration firms in Shanghai and Beijing have been dealing with a surge in applications for U.S. green cards for people with “extraordinary ability.” This portal usually takes a shorter time to process than investment-based green cards.