Caixin
Mar 12, 2013 06:25 PM

More of Country's Rich Own Overseas Assets, Report Says

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(Beijing) -- Wealthy people on the Chinese mainland are transferring more of their assets overseas, a report by the Boston Consulting Group (BCG) and China Construction Bank says.

A BCG representative linked the transfers to a desire for better investment returns, asset security and privacy.

The report, which studied 4,000 mainland bank customers with personal investable assets of more than 6 million yuan, found that 28 percent of them owned overseas assets in 2012, up 11 percentage points on 2011.

People with more than 6 million yuan in personal investable assets held a total of about 33 trillion yuan in assets in China, the report said. Of the latter amount, assets worth 2.8 trillion yuan were sent overseas, which accounted for 3 percent of the country's 2011 GDP.

The writers of the report predicted the value of assets transferred to double in the next three years.

The next tier of rich people has also started to send wealth overseas. The report's 2012 survey on people with investable assets of between 3 million yuan and 6 million yuan found that 26 percent held overseas assets. The figure was negligible in 2011.

Huang He, managing director at BCG, said China's rich were moving assets abroad in search of better and more stable investment returns. Some were preparing for emigration or their children's educations. Asset security and privacy were also major reasons.

The report found that most of the assets have been used for investments in property, bonds and equity markets through foreign financial institutions and Chinese financial intermediaries.

Hong Kong, the United States and Canada were the major destinations, followed by Switzerland, Singapore and Australia.

The public is growing more concerned that the flow of money out of the country was linked to corruption.

Fred Hu, chairman of Primavera Capital Group, said in an earlier forum that considering the strict controls on capital flows, corruption was likely the major reason money was leaving the country.

The BCG-CDB report suggested stricter scrutiny on the transfer of illegal assets to better crack down on graft. It also called for improved protection of personal assets, development of a better social security system and more diversified domestic investment options.

China should also improve its taxation system, the report said, and cut the tax burden on the middle class.

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