Wednesday, February 19, 2014

Open Borders for the Rich

The political refugees and economic migrants the world welcomes.

It is possible to make a great deal of money under Chinese-style “socialism" - either legally, or illegally.  There were more than one million Chinese dollar millionaires. In the ranking of countries with the most millionaires, China is in third place.

65 percent want to leave the country where they made their money, or are at least trying to get a residence permit to live elsewhere. Often, they send their families on ahead.

What’s driving the millionaires to flee? According to, Kristin Kupfer from the Mercator Institute of China Studies in Berlin cited three main motives. "Legal uncertainty is one reason," she said. "Then they are looking for a better educational environment for their children, and a third reason is the very bad environmental situation in China."

Countries around the world are paving the way for these Chinese wealth refugees, offering special programs that issue residence permits in exchange for investment. Australia, the US and the EU are effectively competing to welcome moneyed Chinese. "Countries are trying very hard to attract foreign millionaires or billionaires," says Douglas Goldstein, an international investment adviser and director of Profile Investment Services, which is based in Israel. Portugal started a "Golden Visa" program in 2012, under which the purchase of a property worth at least 500,000 euros will get you a residence permit. Last year 90 percent of applicants were from China and Hong Kong. In September last year, Spain implemented an almost identical program. Greece and Cyprus already hand out residence permits for the purchase of a property worth 250,000 euros. In Hungary, you can buy residency by investing 250,000 euros in a five-year state fund. The Netherlands has jumped on the bandwagon: an investment of 1.25 million euros in the Dutch economy will entitle you to live in the country. Even Malta have joined the nations with passports for sale. In the UK a healthy bank balance speeds up the process to the right to residency, around $1.5 million in investments helps qualify for permanent residency after five years, while spending about $15.6 million cuts that wait to just two years. Zhang Lan made a fortune with the restaurant chain  and was even a representative at the Chinese People's Political Consultative Conference. Last year it was revealed that she was also in possession of a Canadian passport. To grab some of this wealth, officials in Australia certain criteria, including investing at least $4.7 million in financial products like bonds and managed funds, as well as companies based on the far-flung continent. The program has already attracted more than 170 applicants—who are mostly from China. A "regular" investor visa in New Zealand requires, in part, that foreigners hold at least three years of business experience, speak English and be younger than 65 years old. But the country's government legislated easier requirements two years ago. Now, an upgrade to investor "plus" status—which is obtained by spending an additional $6.8 million or so on top of the $1.2 million that regular investors pay—means applicants can have zero business experience, speak any language they want and be an octogenarian, or any other age for that matter. In the U.S., some investors have to create the minimum number of jobs—10 full-time positions within two years—"Some people are basically buying green cards" says Lauren Cohen, the Florida-based attorney which helps craft business plans for wealthy folks who are trying to get these kinds of visas. Meanwhile, in Singapore, the bar was already considered pretty high, as investors had to spend a minimum of $8 million and hold assets worth about $16 million.

Under Chinese law, citizens are forbidden to export more than 50,000 US dollars per year, but this seems to make little difference. The researcher Kristin Kupfer cites revelations connected to "Offshore Leaks," according to which there are more than 21,000 Chinese offshore companies in barely-regulated tax havens in the Caribbean. A lot of the money flows through Hong Kong. "The city serves as a bridgehead for money transfers abroad," Kupfer says.

So these countries offering residency for cash are aiding and abetting fraudsters and criminals.

Zhou Xiaozheng, a professor at the Beijing's People's University of China, summarized the attitude  "Deng Xiaoping said that some people are initially allowed to become rich - but that this wealth should be achieved through honest work," he explained. "However, many of the mega-rich only achieved their wealth through nepotism, embezzlement of government money, and speculation. Now they want to move their money abroad, where it will be safe."

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