China: Following The Money
A little detour from the start-up stuff, but relevant to where entrepreneurial opportunity is.
A dominant meta-narrative of the last decade or so is the strength of the Chinese economy and the weakness of our own economy. There is a whole lot of true in this, but it can be exaggerated — “the grass is always greener” syndrome. The FT has an article, that should have been page 1 material, suggesting that this may be true.
Most shocking is a survey suggesting that 60% of those with the means (defined as $1.6 million in personal wealth) are in the process or are considering emigrating from China. They and others are looking for ways to transfer wealth out of the country, including through the purchase of luxury properties abroad, such as Manhattan penthouses and French Chateaux. The causes are a deteriorating quality of life, institutionalized corruption, and a fear of a coming social explosion, i.e., those without the means or ability to emigrate will deal with these issues through eventual destabilizing political action. One Chinese banker, closely tied to the political class says:
“There is a sense that we are approaching an inevitable breaking point, when the pressures in society will boil over and consume the rulers. Almost all of the elements are in place for an uprising like we saw in 1989 – corruption is worse today than it was then, people feel they can’t get ahead without political connections, the wealth gap is much bigger and growing and there has been virtually no political reform at all. The only missing ingredient now is a domestic economic crisis.”
While commentators have looked foolish predicting such an explosion for over 20 years since Tiananmen, if we are seeing privileged Chinese acting on this fear, including by disrupting their family lives, this may be a leading indicator that the bargain struck by Chinese leaders with their people — growth for silence and stability — is near its end.