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 park his fortune.
Bao, the founder of China Renaissance, was in the process of setting up a private wealth management company in Singapore to wire money out of 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 have suddenly disappeared in China, is just one of a growing number of wealthy Chinese businessmen who have looked to Singapore — dubbed “the Switzerland of Asia” — for Beijing’s crackdown against private industry to escape corruption.
“Wealth has flooded into Singapore from China and Hong Kong in recent years,” an asset manager at a Singapore bank with a large number of Chinese clients, who spoke on condition of anonymity, told Al Jazeera.
“In confidential discussions, many of them have cited the disappearance of Chinese businessmen along with uncertain economic times as the main reasons for withdrawing money from China,” the asset manager said.
Chinese investment banker Bao Fan was reportedly attempting to relocate some of his wealth to Singapore before his disappearance last month [File: Mike Blake/Reuters]Singapore, named the world’s top place to do business by the Economist Intelligence Unit, has for years built a reputation as a haven for senior Chinese, particularly since the rise of Xi Jinping, China’s most powerful leader in decades, to take charge of his country in an increasingly authoritarian and nationalist direction.
During the first five years of an anti-corruption campaign led by Xi, more than 100 top officials within the Chinese Communist Party and tens of thousands of lower-level officials and businessmen have been prosecuted for economic crimes.
More recently, a regulatory crackdown on private industry that has touched sectors from technology to education to real estate has caused money to flee China.
“My clients have told me that in the current political climate China is less tolerant of wealthy people than it used to be and therefore wanted to get their wealth out,” a manager at a major international bank with offices in Singapore said on 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 what it used to be, having been unstable and economically declining for years.”
Simply put, China is becoming a “less attractive country to invest in,” prompting Chinese investors to seek “better opportunities abroad,” Sara Hsu, an expert on Chinese fintech and shadow banking at the University of Tennessee, told Al Jazeera.
And while moving large amounts of money out of China is difficult, many have found a way, Hsu said.
Chinese President Xi Jinping has overseen a sweeping crackdown on corruption and private industry [File: Alexei Maishev/Kremlin via Reuters]The influx of Chinese money to Singapore is being felt strongly in the city-state.
Mainland Chinese buyers accounted for nearly a quarter of buyers for the 425 luxury homes sold in the city in 2022, outpacing US citizens by more than two to one.
According to data from real estate consultancy Knight Frank, residential property prices in Singapore rose 14 percent in 2022, while prices in other cities with traditionally popular property markets, such as Hong Kong and Sydney, fell by single digits, although analysts said it was due to domestic factors , non-wealthy foreigners, have fueled the rising prices.
Chinese nationals, who are not eligible to buy property under Singaporean law, have opted to rent instead, contributing to more than tripling the annual rental costs of some high-end properties.
Rents across the city-state rose 33.2 percent from January 2022 to January 2023, according to the Straits Times newspaper.
A lawyer in the wealth management sector in Singapore estimated last month that the number of wealth management offices will more than double in 2022 from 700 to 1,500, about half of which are based in China.
On the touristy island of Sentosa, off the south coast of Singapore’s main landmass, the influx of foreign funds has seen a Sentosa Golf Club membership for foreigners rise to S$880,000 (US$660,000), double the 2019 level.
“You also notice that there are many more Chinese in the cityscape than there were a few years ago,” said the supervisor of the major international bank, who wished to remain anonymous.
“Everywhere you go, you hear people with mainland Chinese and Hong Kong accents.”
Sales manager Emma Chiu has also noted the presence of mainland Chinese 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 eating at all the fancy restaurants,” Chiu told Al Jazeera.
“Some of the Chinese money flashes are getting a little pretentious for my taste, but I think that’s part of what makes them fun to watch as well.”
Singapore’s property and rental prices are skyrocketing [File: Edgar Su/Reuters]The arrival of more mainland Chinese in Singapore shows that wealthy Chinese are trying not only to protect their wealth but also their families, according to the wealth manager, who spoke on condition of anonymity.
Singapore operates a global investor program through which individuals can obtain permanent residency for themselves and their families by investing a minimum amount in the country.
“By parking their wealth here, they can protect their wealth and life from a potentially precarious political situation in China or Hong Kong,” the wealth manager said.
For wealthy foreigners looking for security for themselves and their assets, Singapore has significant attractions.
The city-state is a stable tax haven that has provided banking and investment management services to wealthy individuals from around the world for decades.
Since gaining independence in 1965, Singapore has been a poster child for stability. The ruling People’s Action Party has enjoyed one of the longest uninterrupted periods of government in the world – albeit in a polity that effectively bans protests without official authorization and has one of the lowest rankings for media freedom on the planet.
Crime and corruption rates are low, and per capita gross domestic product (GDP) is among the highest in the world at over $72,000.
For mainland Chinese in particular, Singapore is also close to home, both geographically and culturally. The country shares the same time zone as China, and Mandarin is widely spoken by the 70 percent of Singapore’s population who are ethnically Chinese.
But the flow of assets and people from China to Singapore may not stop.
Yang Jiang is a senior researcher at the Danish Institute for International Studies, where she conducts research on contemporary Chinese political economy. She said Chinese authorities may seek to further tighten their already extensive capital controls if capital flight continues.
“If many businessmen move out of China, it could look like a Chinese brain drain,” Jiang said.
“And that’s a development the government wants to stall because China needs these private individuals to maintain its market momentum.”
Food prices in Singapore have risen sharply over the past year [File: Caroline Chia/Reuters]The influx of foreign wealth is not welcomed by everyone in Singapore either.
While much of Singapore’s housing stock is reserved for Singaporeans by law, shielding much of the market from foreign purchases, the cash inflow has been felt in other areas.
“I’ve heard stories of crazy spending sprees from new arrivals from the mainland,” Chiu said.
“And I personally also find that when I want to go shopping today, things are either a lot more expensive than they used to be, or they’re just simply sold out, which I think has to do with all the foreign money that’s flowing through the city.”
School teacher Sean Feng said the sharp rise in food prices has made it difficult for him and his family to make ends meet.
Singapore imports more than 90 percent of its food, leaving the country vulnerable to external headwinds. According to Singapore’s Ministry of Statistics, food inflation topped 8 percent in January and February, well above the headline inflation rate.
Singapore’s core inflation rate of 5.5 percent in February was among the highest in Southeast Asia and more than double the rates 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, alongside New York City.
“Many everyday necessities are much more expensive now,” Feng told Al Jazeera. “I know inflation has been bad everywhere in recent years, but when so many people with so much money settle here, it’s bound to get worse for us.”
“I just hope Singapore can be a place for all those who call the city home,” Chiu said, “and not just a place for the super-rich.”
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