China's wealthy are handing their money to strangers at illegal underground banks to get their money out of the country, per Bloomberg.

Following the reopening of international borders after the pandemic, advisors catering to affluent individuals have reported a surge in demand for overseas contingency plans. Heightened concerns stemming from crackdowns on industries viewed unfavorably, geopolitical uncertainties, and President Xi Jinping's "common prosperity" initiative have unsettled both the wealthy and middle-class populations. The domestic economic outlook appears increasingly grim, with challenges such as struggling exports, declining house prices, and a substantial youth unemployment rate. Many affluent families perceive it as necessary to allocate funds outside their home country, whether to diversify assets or establish the groundwork for potential future emigration.

While traditional safe havens like Vancouver real estate and U.S. equity investments remain appealing, Singapore has gained prominence as a favored destination over the past two years. The stable, low-tax environment of this city-state, where Mandarin is one of the official languages, is evident in the influx of Chinese capital. Signs of this presence are widespread, with nightclubs commanding extravagant sums of up to $70,000 per evening during events like the Formula One Singapore Grand Prix. The city boasts trendy wine bars catering to Chinese billionaires, and there has been a significant increase in the number of family offices overseeing the assets of the affluent.

The exact scale of this industry remains uncertain, but disclosures from authorities indicate its immense scope. A 2021 investigation in China's Gansu province revealed an operation with assets amounting to 75.6 billion yuan. This network involved five entities that utilized over 8,000 bank accounts across more than 20 provinces.

Currently, there are growing indications of a greater exodus of funds. Real estate consultancy Juwai IQI predicted that over 700,000 Chinese individuals will leave the country in the next two years. Prime property-buying destinations based on searches on their platform include Australia, Canada, and the UK. Singapore introduced a 60% property tax for foreign buyers in April, which has constrained midrange demand.