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Chinese elites settled abroad selling off assets in anticipation of Western sanctions

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Asia | June 18, 2022 4:55:21 AM IST
Chinese elites settled abroad are selling off their immovable assets after the Chinese Communist Party (CCP) banned ownership to insulate the government from future economic sanctions from Western countries, especially the US.

This is seen as a fallout of the Russia-Ukraine conflict and the subsequent Western sanctions on Russia. China, already facing a slew of sanctions impacting its government, various organisations and individuals, is taking steps to ensure that any Chinese action deemed controversial by the West does not invite sanctions that weaken the communist government, reported The HK Post.

The party is seeking compliance reports from its citizens abroad and many have sold off their shares in foreign companies and are in the process of divesting themselves of their real estate.

The sell-off clamour came about after the CCP's Central Organisation Authority issued a notice a few weeks ago, reported The HK Post.

It specifically "prohibits spouses and children of ministerial-level officials from holding -- directly or indirectly -- any real estate abroad or shares in entities registered overseas".

The move comes in anticipation of future sanctions on China as the sanctions on Russia destroyed the economic credibility of the Russian elite living abroad, including those in the United Kingdom. The Chinese want the risk to be minimal in case they are the targets in future, reported The HK Post.

Western media has attributed this decision directly to President Xi Jinping. He has been quoted as saying to the party as early as this January that "leading cadres, especially senior cadres, must pay attention to family discipline and ethics," and that top communist official should "lead by example in managing their spouses and children properly, being a dutiful person and doing things in a clean way".

As a follow-up to the order to relinquish foreign assets, the CCP has also decided to "block promotions for senior cadres whose spouses or children hold significant assets abroad", according to Western media reports emanating from Hong Kong.

The West sees the communist directive, outlined in an internal notice by the party's powerful Central Organization Department, as a factor that could "play a role in Chinese leader Xi Jinping's efforts to increase his influence at a twice-a-decade leadership shuffle scheduled for later this year".

This makes defense analysts suspect that China may be analysing the military nature of the Russian invasion of Ukraine. What immediately comes to their mind is Taiwan. That is the only reason why President Xi may want to seek to "minimize geopolitical risks for the Communist Party amid concerns that officials with overseas financial exposure could become a liability if the US and other Western powers impose sanctions against Chinese leaders and their relatives," reported The HK Post.

There are internal, and political repercussions of the order as well. The compliance pledges the CCP is asking overseas Chinese elite to sign "would give Xi leverage over any official found violating the overseas-assets rules, as the offending cadre would become liable for serious offences like disloyalty and dishonesty to the party".

Xi has used his anti-corruption drive to purge his detractors and control the fates of rich Chinese individuals and companies. In 2014, the CCP identified around 3,200 Chinese it called "naked officials".

"Naked" officials are generally senior officials who have sent their families abroad, often as a conduit for transferring their ill-gotten assets abroad, and in preparation for their own flight. (ANI)

 
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