China’s wobbly response to the bursting of its stock market bubble, the sudden devaluation of the renminbi and the mystery over the true health of the country’s economy continue to spook investors, large and small.

But China’s wealthiest people know exactly what to do in these bewildering times: get some of their money out.

More than 60 per cent of wealthy Chinese people surveyed in July by FT Confidential, an investment research service at the FT, said they planned to increase their overseas holdings in the coming two years.

Residential property was the most popular future investment, followed by fixed-income securities, commercial property, trust products and life insurance policies.

A significant proportion of China’s wealthy are self-made business people who have managed to profit from the nation’s economic expansion — a phenomenon that has led to massive inflows of foreign investment into China.

FT Confidential identified and polled 77 wealthy individuals, divided into two groups: those with Rmb6m ($941,000) or more to invest, and a so-called “mass affluent” group with Rmb600,000-Rmb6m.

An attempted rebalancing of the economy away from investment and towards greater consumption has dealt a blow to many once highly lucrative industries such as energy and low-end manufacturing, putting business owners under stress as profits have fallen.

The high-level anti-graft campaign kicked off by President Xi Jinping is making the problem worse as private bosses scramble to adjust their relationships with the government — key to their business success.

With uncertainty rising at home, China’s rich have started looking elsewhere to store their wealth.
“China’s policy changes so quickly,” said a businessman in Shenzhen who would only give his name as Mr Huang. “I am worried about the safety of my wealth.”
The July stock market rout in Shanghai and the policy dilemma it has thrown up is likely to have underlined those concerns.

The survey found that 47 per cent of so-called high net worth individuals had earmarked more than 30 per cent of their assets for investment overseas.

The US was the preferred destination for 42 per cent of respondents. Its robust economy, coupled with high quality education, is making it a magnet for China’s wealthy class. Next in line were Hong Kong, Australia, Canada and the UK.

The top reason for overseas investment, cited by more than 38 per cent of respondents, was to make it easier to get their children into good schools. As wealthy parents race to send their kids abroad to receive western education, many are buying apartments in college towns.

Official data show 460,000 Chinese students went abroad to further their education in 2014, up from 115,000 a decade ago.

“The focus of China’s high net worth families has shifted from making as much money as you can to protecting your wealth,” said Shang Dai, chief executive of Kuafu Properties, a New York-based developer that draws funds from Chinese investors.

Many parents are buying properties to make sure their children have a slot at top schools.

Long Island, a wealthy region east of New York City, has in recent years seen an influx of Chinese homebuyers seeking to tap the area’s high-quality public schools.

Jennifer Lo, a broker at Douglas Elliman, estimates that Chinese investors accounted for a quarter of buyers of homes worth $3m and above in Nassau county — home to some of the best high schools in the country — from January 2013 to February this year.

Indeed, so obsessed are Chinese parents with school districts that Barbara Candee, a director at Daniel Gale Sotheby’s International Realty, which specialises in Long Island, found the only English word some of her Chinese clients could say is “Jericho”, a Long Island hamlet where the school district is ranked second in the US by Niche, an education ranking provider.

Another trigger for foreign investment is an effort by wealthy Chinese to get foreign citizenship. The survey found that almost a third of respondents bought overseas assets as part of schemes to apply for local passports or permanent residency.

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