China’s Brain Drain Gives Way to a Yuan Drain

China has long acknowledged that it has a problem with its best and brightest leaving the country to study and not returning. According to the Chinese Ministry of Education, only around a quarter of the 1.4 million Chinese students and scholars who have left the country since it opened up to the outside world in the late 1970s have returned. Now with its rapidly growing GDP and burgeoning state coffers, Beijing is in a position to try to turn the situation around. In 2008, it launched its “1000 Talents Program” designed to bring top notch global talent to China. By providing strong financial and research incentives to the some of the world’s leading lights scholars, the program has had some notable successes. It is too early to tell, however, how well these returnees—or foreign talent—will be able to adapt their talents from abroad to the political culture that many of them fled a decade or more ago.

Having made a head-start in addressing one of its problems of human capital, Beijing must now gird itself to address another. Even as China seems to be importing back its top academic talent, it appears to be on the brink of losing its top wealth-making talent. According to the Global Times, the 2011 Private Wealth Report, published by China Merchants bank and Bain & Company, indicates that nearly 60 percent of Chinese who have at least 10 million yuan ($1.53 million) in individual assets are either completing the process of emigration or are considering it. Even more surprising, of those Chinese who have profited most from staying home—earners with at least 100 million yuan ($15.3 million) in investment assets—27 percent have already left China and an additional 47 percent are thinking about it.  The stated reasons behind their departure include education for their children, pensions, and general insecurity.

These Chinese may not be taking to the streets, but they are still voting with their feet—or perhaps more accurately, with their pockets.