Most people missed the real point of the Bo Xilai story, which wasn’t about murder or the failed attempt to create a populist new Cultural Revolution. It was about how China’s upper class is trying to get as much money out of the country before the collapse happens.
After years of money flowing in, in the past year the trend has been reversing: cash is beginning to flow out of China. The Wall Street Journal estimates that $225 billion left China in the 12 months leading up to September.
225 billion is serious money, even in a country with a GDP of 7 trillion, and as discussed previously, it’s one reason why China’s ruling class is afraid of American economic failure. America is the place, or one of the biggest places, where they keep their money.
China’s elites know better than anyone else how much of the economic growth is a scam and how much of China’s Century is a sand castle built on water and they are taking care of their families first, moving as much capital abroad as they can into investments in safer countries.
Meanwhile their children pick up Western degrees and stay there. Even when they come back, they often retain some links that will allow them to quickly relocate at short notice.
China is not betting on China. It’s betting on the West.