Mainland residents are estimated to have illegally transferred US$254 billion (HK$1.97 trillion) of capital out of the country due to the ongoing property crisis and economic uncertainties, the Wall Street Journal reported.
The quarter-trillion-dollar rush, recorded in four quarters ending in June, has exceeded that of the capital outflux 10 years ago, it said. The previous outflow triggered concerns about the potential outbreak of a financial crisis.
But this time, the transferred capital takes up a smaller proportion of China's economy than 10 years earlier, as the country's gross domestic product nearly doubled from 2014 to 2023.
To avoid capital controls, people used various means, including shipping valuables overseas or paying exorbitant prices for imported goods.
Among the new methods, people shipped computer hard disks loaded with cryptocurrencies to other jurisdictions, where the digital assets are exchanged for cash. Some residents also shipped artwork to Hong Kong for auction and deposited the proceeds in Hong Kong or US dollars - or other foreign currencies.
Since there are no capital controls in Hong Kong, the sellers can transfer the money elsewhere.
The outflow is still ongoing, indicating that domestic investment opportunities are so scarce that people are taking risks in a bid to gain better returns, the report said.
Staff reporter
