Rich Chinese are moving money offshore using art and crypto
Last Updated on 27 October 2024 by CryptoTips.eu
The Chinese economy isn’t humming like it used to. After Beijing decided to close its borders for longer than other major economies during Covid, China fell behind the United States and several countries in Europe in terms of growth, exports and development. Even though their growth is greater in percentage terms, they ran into problems in their real estate developments and because of the ongoing tariff war with the US.
A very vulnerable point turned out to be the value of the local currency, the Chinese Yuan, which continues to loses value against the Dollar. Rich Chinese have therefore been moving their money abroad (even though this is illegal). The most popular methods to circumvent the authorities are art and crypto.
Singapore and Hong Kong
Asian media recently calculated that wealthy Chinese have moved some $250 billion out of the country in recent months, mostly illegally. This is because a real estate market in trouble and economic uncertainties about future growth are pushing the richer part of the Chinese population to look for safer places abroad to temporarily park their money there so that it doesn’t lose value.
Normally, moving your money abroad from China is quite difficult. The Communist Party imposes strict capital controls that limit individual purchases of foreign currency to $50,000 per year. Any amount above this could result in a long prison sentence.
Two methods of moving your money out of China have been very popular in recent months, according to a study by the Wall Street Journal: art and crypto.
With art it works like this. You buy a painting or a statue in China and then have it auctioned in Hong Kong. You have the auction house put the money you receive for it in a Hong Kong bank account in your name. After all, if you open an account in Hong Kong yourself, you will need to provide proof for every $10,000 you deposit. The arrangement does not (yet) exist for art.
The second method is crypto, and is mainly done via Singapore. In China itself, crypto trading is prohibited by law, but it is still legal to own a crypto wallet (another loophole in the law). So you buy crypto for a fairly large amount, load it onto a USB or a hard drive, travel to Singapore and sell your crypto there. You put the money you earn into a bank account in Singapore in your name.
We wonder how long Beijing will still allow this now that the Americans are reporting on it, of course.
