Canada: China's New Gold Mountain
|Our Correspondent||Mar 28, 2013|
Last July, the Canadian government suspended its Federal Entrepreneur Program - essentially visas for cash - under the weight of tens of thousands of applications.
Despite a provision requiring applicants to loan C$800,000 - the equivalent of US$784,450 - to the Canadian and its local governments for five years, and other criteria, the program crashed because of the numbers, significant totals of them Chinese, and apparently significant totals of them fleeing with ill-gotten funds.
Before the program - which then took in only 700 such applicants per year - was suspended, it typically reached its annual goal in half an hour. The backlog stood at 88,555 when it was halted. With processing times running as long as eight years at some visa offices, some millionaire applicants chartered private planes to be first to submit their applications, Canadian media reported.
Canada's government, according to a statement by Jason Kenney, the Citizenship, Immigration and Multiculturalism minister, is redoing the program to support "entrepreneurs, innovators and world class research." Programs will target more active investment in Canadian growth companies and more innovative entrepreneurs and attempt to make the process more responsive, he said. It was to be up and running by the start of 2013, but is still in the works.
"Originally designed in the 1970s, the Federal Entrepreneur Program has not kept pace with changing economic needs," a spokeswoman for the Canadian consulate in Hong Kong told Asia Sentinel by email. "As such, a review of the program is currently underway with a goal of determining how it can better contribute to broader government of Canada economic priorities related to innovation and productivity. Processing times are also of concern...This runs contrary to the department's transition towards a fast and flexible immigration system, which is able to meet the new and emerging needs of Canada's economy."
Accordingly Canadian immigration authorities have been consulting with local governments and the general public on ways to reform the program, the spokeswoman said. "This work is ongoing."
The sheer weight of numbers of Chinese with enough money to be able to loan the Canadians US$784,000 for five years is astonishing. Other publications have reported on a study by China Merchants Bank and the US consulting firm Bain & Co. which indicated that 60 percent of Chinese with at least RMB 100 million (US$15 million) in assets have either already emigrated (23 percent) or are considering it (47 percent).
In 2011, 150,000-plus Chinese gained permanent residency in major immigration destinations, with the United States, Canada and Australia as the top three such countries, according to the Chinese government's Annual Report on Chinese International Migration 2012. New Zealand, with a population of 4 million, has 135,000 Chinese immigrant residents. Most of those seeking to get out are high net worth individuals, with investments mainly in real estate, foreign currency and deposits and stocks, among other fields, the government report said.
That has become the elephant in the room for the Chinese government. A 2011 report by the Bank of China, titled "How Corrupt Officials Transfer Assets Overseas, and a Study of Monitoring," using statistics compiled by the Academy of Social Sciences, estimated that as many as 18,000 Communist Party and government officials and others had fled the country with a missing RMB 800 billion.
"The Bank of China emphasized the fact that nobody, up to now, has been able to provide an authoritative figure of the exact sum pilfered, and the recent figure of 800 billion yuan is only an estimate. It is nonetheless an astronomical sum," according to Xin Haiguang, writing in China's Economic Observer in 2011. "It is equivalent to China's total financial allocation for education from 1978 to 1998. Each official stole, on average, an estimated 50 million yuan (more than US$7 million)."
Like most of the governments of the countries where rich Chinese migrate to, nobody seems to question where the money comes from - any more, for instance, than the UK questions where the fleeing Russians buying London real estate got their money. In Canada's case, the most notorious migrant was Lai Chiangxing, who ran a vast smuggling operation in the 1990s, illegally moving US$4.4 billion worth of cars, cigarettes, oil and other merchandise through the port city of Xiamen and paying bribes to 64 different public officials.
When Prime Minister Zhu Rongji sent hundreds of investigators to Xiamen to clean up the smuggling ring, Lai escaped to Hong Kong, then to Vancouver, where he ultimately staged a 12-year fight against extradition until the Canadians wrung a promise from the Chinese government that they wouldn't execute him. They did execute 14 of his employees.
The United States is no better. It was reported that the wife of Zhang Shuguang, the deputy chief engineer and deputy chief designer of the system, who was sacked and arrested after having allegedly misappropriating US$2.8 billion into his overseas accounts in the United States and Switzerland, owned three mansions in Los Angeles. America in fact is the destination most favored by high-ranking corrupt Chinese officials fleeing the country with large sums of money, according to a report by the People's Bank of China, which was published online in 2012 but which has subsequently been withdrawn. Other popular destinations include Australia and the Netherlands, the report said.
Obviously the 150,000 people seeking to get out of China annually aren't all crooks. Three decades of headlong economic growth have created a burgeoning entrepreneurial class just as anxious to emigrate as the crooked cadres. Dr Jim Walker, the head of the Hong Kong-based Asianomics financial analysis firm, said he had spoken with a professor who estimated that a third of his recent students and their families - all private business owners - had already left or taken possession of foreign passports.
They are anxious to obtain better education for their children, safer investment opportunities and improved quality of life, according to the Chinese annual immigration report. According to the Hurun Report, an annual compendium of China's super-rich, more than 85 percent of Chinese millionaires plan to send their children abroad for education.
Nonetheless, the report is troubling because China is losing money, talent and public officials loaded with graft. Immigration Minister Kenney's statement didn't say anything about the problem of weeding out rich fugitives from Chinese justice. Nor is there any sign that China will sign extradition treaties to get them back any time soon.