Taichung, Taiwan – Before disappearing in mid-February, Bao Fan, one of China’s best-known investment bankers, was reportedly looking for a safe place to stash his wealth.
Bao, the founder of China Renaissance, was setting up a private wealth management company in Singapore to transfer money from China and Hong Kong, the Financial Times reported last month, citing four people familiar with the plans.
Bao, who has joined a long list of influential businessmen who suddenly disappear in China, is just one of a growing number of wealthy Chinese businessmen who have looked to Singapore – dubbed the “Switzerland of Asia” – to escape the Beijing’s crackdown on private industry and corruption.
“Wealth has been pouring into Singapore from China and Hong Kong in recent years,” an asset manager at a Singaporean bank with a large number of Chinese clients, speaking on condition of anonymity, told Al Jazeera.
“In confidential conversations, many of them have cited the disappearances of Chinese businessmen along with uncertain economic times as the main reasons for withdrawing money from China,” the asset manager said.
Named the world’s best place to do business by the Economist Intelligence Unit, Singapore has built a reputation for many years as a haven for highly regarded Chinese, especially since the rise of Xi Jinping, China’s most powerful leader in decades, who led his country into an increasingly authoritarian and nationalistic direction.
During the first five years of an anti-corruption campaign led by Xi, more than 100 senior Chinese Communist Party officials and tens of thousands of junior officials and businessmen were prosecuted for white-collar crime.
More recently, a regulatory crackdown on private industry, which has hit sectors from technology to education and real estate, has caused money to flee from China.
“My clients have told me that in the current political climate, China is less tolerant of wealthy people than before, so they wanted to take their assets out,” said a supervisor at a major international bank with branches in Singapore. condition of anonymity, Al Jazeera said.
“In the past, Chinese investors would have looked to Hong Kong, but the city is not as attractive as an investment destination compared to before due to years of instability and economic decline.”
Simply put, China is becoming a “less attractive country to invest in,” leading Chinese investors to look for “better opportunities abroad,” Sara Hsu, an expert on Chinese fintech and shadow banking at the University of Tennessee, told me. , to Al Jazeera.
And while getting large amounts of money out of China is challenging, many have found a way, Hsu said.
The influx of Chinese money into Singapore has been strongly felt in the city-state.
Mainland Chinese buyers made up nearly a quarter of buyers of the city’s 425 luxury homes sold in 2022, more than twice as many as US citizens.
Residential property prices in Singapore rose 14 percent in 2022, according to data from property consultancy Knight Frank, while prices in other cities with traditionally popular property markets such as Hong Kong and Sydney fell by single digits, though analysts have said domestic factors, not wealthy foreigners , have driven rising prices.
Chinese nationals who are not eligible to purchase property under Singapore law have opted to rent instead, contributing to more than tripling the annual rental cost of some luxury properties.
Rents rose 33.2 percent across the city-state between January 2022 and January 2023, according to the Straits Times newspaper.
A lawyer in the Singapore asset management industry estimated last month that the number of asset management offices will more than double by 2022 from 700 to 1,500, about half of which will be based in China.
On the touristy Sentosa Island off the south coast of Singapore’s main landmass, the influx of foreign money has caused membership in the Sentosa Golf Club to rise to S$880,000 ($660,000) for foreigners, double the price in 2019.
“You also notice that there are many more Chinese in the cityscape than a few years ago,” said the supervisor at the large international bank, who spoke on condition of anonymity.
“Everywhere you go, you hear people with Chinese and Hong Kong accents.”
Sales manager Emma Chiu has also noticed that there have been more Chinese from the mainland in Singapore in recent years.
“My friends and I often talk about how we see all these mainland Chinese driving around in big, expensive cars, wearing the latest designer brands and dining in all the fancy restaurants,” Chiu told Al Jazeera.
“Part of the money flashing by the Chinese is getting a little garish for my taste, but I think that’s part of what makes them fun to watch as well.”
The arrival of more mainlanders in Singapore shows that wealthy Chinese not only want to protect their assets, but also their families, said the asset manager who spoke on condition of anonymity.
Singapore has a global investor program that allows individuals to gain permanent residency for themselves and their families if they invest a minimum amount of money in the country.
“So by parking their assets here, they can protect their fortunes and their lives from a potentially precarious political situation in China or Hong Kong,” the asset manager said.
For wealthy foreigners seeking security for themselves and their belongings, Singapore has considerable appeal.
The city-state is a stable tax haven that has been providing banking and asset management services to high net worth individuals from around the world for decades.
Since independence in 1965, Singapore has been a model of stability. The ruling People’s Action Party has had one of the longest unbroken reigns in the world – albeit in a polity that effectively bans most protests and has one of the lowest rankings for media freedom.
Crime and corruption rates are low and gross domestic product (GDP) per capita is among the highest in the world at over $72,000.
Especially for Chinese mainlanders, Singapore is both geographically and culturally close to home. The country is in the same time zone as China and Mandarin is widely spoken among the 70 percent of Singapore’s population who are ethnic Chinese.
But the flow of assets and people from China to Singapore may not last long.
Yang Jiang is a senior researcher at the Danish Institute for International Studies, where she conducts research on China’s contemporary political economy. She said Chinese authorities could try to further tighten their already extensive capital controls if capital flight continues.
“If many businessmen leave China, it could look like a Chinese brain drain,” Jiang said.
“And that is a development that the government would like to suppress, as China needs these individuals to maintain its market dynamics.”
In Singapore, too, the influx of foreign wealth is not welcomed by everyone.
While much of Singapore’s housing is legally reserved for Singaporeans, isolating much of the market from foreign purchases, the influx of money is being felt in other areas.
“I’ve heard stories of frenzied spending by newly arrived mainlanders,” Chiu said.
“And I also personally notice that when I want to shop these days, things are much more expensive or just sold out compared to before, which I think has to do with all the foreign money flowing through the city.”
School teacher Sean Feng said sharp increases in food prices have made it difficult for him and his family to make ends meet.
Singapore imports more than 90 percent of its food, making the country vulnerable to external headwinds. Food inflation exceeded 8 percent in January and February, significantly higher than headline inflation, according to Singapore’s Department of Statistics.
Singapore’s core inflation of 5.5 percent in February is among the highest in Southeast Asia and more than twice that of other developed Asian economies such as Hong Kong, Japan and Taiwan. In December, the Economist Intelligence Unit named Singapore the most expensive city to live in, along with New York City.
“A lot of everyday items are a lot more expensive now,” Feng told Al Jazeera. “I know inflation has been bad everywhere in recent years, but if so many people with so much money move here, it will only make things worse for us.”
“I just hope Singapore can be a place for everyone who calls the city home,” Chiu said, “and not just a place for the super rich.”