[NTDNewsNovember92021Beijingtime]Xi Jinping advocates “common prosperity” and has caused panic among the wealthy circles in China. In order to preserve their wealth, the rich have resorted to three tricks to hide money and transfer assets, but they all face risks.
3 ways to transfer funds for the rich in China
US Fox News reported on November 7 that the “common prosperity” policy prompted the Chinese rich to find new ways to protect their wealth. In order to hide and transfer funds, the rich have adopted three main methods: investing more funds in offshore trusts, diversifying assets to invest in green technology and foreign companies, and hiring underground banks to exchange foreign exchange and relocate funds when necessary.
According to the report, these three methods are all at risk. Some are brand-new attempts, and some are faced with difficulties because of the laws enacted by the Chinese Communist government.
Offshore trust is the “protective cover” of property
In fact, since the start of the trade war in 2018, China’s wealthy people have begun to actively transfer funds, and more and more wealthy people use offshore family trust funds to avoid risks.
Offshore trust refers to a trust established abroad or in a non-mainland area, but the assets under management are in the mainland. According to industry insiders, offshore trusts are equivalent to a “protective cover” for property, which can avoid risks. Even if the company goes bankrupt, the assets held by the rich through offshore trusts will not be repossessed, liquidated, etc.
According to previous media reports, Sun Hongbin, Chairman of Sunac China, transferred a market value of US$4.5 billion in Sunac’s equity to an offshore trust, the Sun Family Trust of Southern Kota, on the last day of 2018.
Only 0.2% of Ma Yun’s shares in Ali are held by individuals, and the rest are held by offshore family trusts, overseas charitable foundations, and Cayman Holdings. Liu Qiangdong holds 15.5% of JD.com through offshore trust.
However, Fox News reported that without knowing what laws Beijing may enact in the future for trust management, financial advisors advise clients to maintain the lowest possible level of control over personal assets.
“Common Wealth” set off a wave of donations
Chinese wealthy people once washed their funds overseas by buying artworks. Cryptocurrency transactions were originally a popular way to transfer funds, but the CCP recently ordered a ban on cryptocurrency transactions, blocking this channel.
In 2020, with the COVID-19 pandemic and China closed its borders, it has become more difficult for the wealthy to transfer funds overseas.
In August this year, Xi Jinping put forward the policy of “common prosperity” at the meeting of the Central Finance and Economics Commission, claiming to narrow the gap between the rich and the poor in China, causing panic among the wealthy circles in China.
Chinese technology giant Tencent immediately announced that it would invest 50 billion yuan to form a “special plan for common prosperity.” Prior to this, Tencent had invested 50 billion yuan to launch the “sustainable social value innovation” strategy.
Alibaba subsequently promised to invest 100 billion yuan to help common prosperity; Pinduoduo promised to invest 10 billion yuan to devote itself to agricultural development; Xiaomi founder Lei Jun donated a large amount of shares to charities.
At the same time, the “modern Tao Yuanming” wave of China’s super rich, Ma Yun, Zhang Yiming, Huang Zheng, Liu Qiangdong and other rich men “retired before they are old” one after another, retired early.
Li Chun, deputy chief executive of the WTO and RTA Center of the China Economic Research Institute, told Radio Free Asia that the trend of “giant rich donations” or “retire before old age” is a recoil triggered by the policy goal of “common prosperity”.
Li Chun said that high-income earners are highly sensitive to the direction of political changes, and they feel that the future environment is not too dangerous for them, at least it is not friendly. Before being investigated and filed, hurry up and retreat to “guarantee their lives”!
Fox News reported that keeping a low profile is the key to China’s richest people avoiding purge. They began to delete their social media accounts and refused to accept interviews in order to prevent their remarks from being interpreted as anti-government and thus suppressed.
(Reporter Luo Tingting Comprehensive Report / Chief Editor: Wen Hui)
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