# China Tightens Its Grip on Billions in Offshore Wealth

An episode of [Big Take](https://invisiblenetwork.ai/podcast/1578096201), 9 Jun 2026, 19 min.

Audio: https://podtrac.com/pts/redirect.mp3/tracking.swap.fm/track/UVBrz8bN8aM2Xe47PEPu/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/825d4e29-b616-46f4-afd7-ae2b0013005c/af647fd3-446d-4676-a625-b464013fb365/audio.mp3?utm_source=Podcast&in_playlist=8b1dd624-a026-43e9-8b57-ae2b00130066

Offshore trading has long given Chinese investors access to global markets — often through legal gray areas. Now, Beijing is stepping in with its biggest crackdown in decades. On today’s Big Take Asia Podcast, host K. Oanh Ha speaks with Bloomberg’s Lulu Chen about the sweeping restrictions and why Beijing is tightening controls over money leaving the country. We have a special Bloomberg subscription offer for podcast listeners at Bloomberg.com/podcastoffer. Read more: China Targets Offshore Billions in Biggest Crackdown in Decades Hosted by K. Oanh Ha; Produced by Naomi Ng, Yang Yang; Reported by Lulu Chen; Edited by Paddy Hirsch. Fact-checking by Rachael Lewis-Krisky, Laura Newcombe; Engineering by Taka Yasuzawa. Senior Producer: Naomi Shavin; Deputy Executive Producer: Julia Weaver. Executive Producer: Nicole Beemsterboer. See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
[0:08] Speaker 2: Recently, my colleague Luluchin, who covers Asia finance here in
[0:12] Speaker 2: Hong Kong, told me a story about a Chinese investor, Tom.
[0:17] Speaker 1: Tom's a Beijing based tech executive. He's been trading US
[0:21] Speaker 1: stocks for years. Technically, Chinese citizens aren't allowed to buy
[0:26] Speaker 1: and sell shares inform Marcus aside from a few permitted channels.
[0:32] Speaker 2: But for years, people like Tom have used Chinese trading
[0:35] Speaker 2: apps and online brokers to invest in markets outside of China,
[0:39] Speaker 2: from blue chip stocks like Apple and Coca Cola to
[0:42] Speaker 2: the S and P five hundred exchange traded funds.
[0:45] Speaker 1: He was doing it through a few Chinese brokerages that
[0:49] Speaker 1: are very popular. One is called Futu, one's called Tiger.
[0:53] Speaker 1: These are your equivalent of Robin Hood, and because the
[0:58] Speaker 1: US stock markets were doing so well well, a lot
[1:01] Speaker 1: of the trading was done focusing on US stocks.
[1:05] Speaker 2: These apps are not authorized to allow Chinese investors to
[1:09] Speaker 2: trade in foreign stocks, but in the more than ten
[1:12] Speaker 2: years that these platforms have been operating, Beijing has largely
[1:17] Speaker 2: looked the other way.
[1:18] Speaker 1: For a while, it seems like all these trades were
[1:21] Speaker 1: within the spirit, if not the letter of the law,
[1:25] Speaker 1: and then one day Tom gets hit with a fifteen
[1:29] Speaker 1: thousand dollars tax bill for his gains trading these stocks.
[1:33] Speaker 2: It was the first time the Chinese government had even
[1:36] Speaker 2: appeared to be aware of Tom's illegal overseas gains.
[1:41] Speaker 1: Tom thought that, oh, since you're taxing me, maybe this
[1:45] Speaker 1: is a form of blessing.
[1:47] Speaker 2: But last month, not long after Tom received that tax bill,
[1:51] Speaker 2: investors like him got another warning sign Chinese authorities launching
[1:56] Speaker 2: a crackdown on illegal cross border trading while screwing.
[2:00] Speaker 1: Rate our Chinese regulators plan to find three brokerages for
[2:03] Speaker 1: illegal cross border businesses, including Tiger and Futu as they want.
[2:09] Speaker 1: What the government has said is that none of these
[2:12] Speaker 1: apps are allowed to allow mainland people to trade offshore
[2:18] Speaker 1: stocks anymore. They've given them a two year time period
[2:22] Speaker 1: to unwind all the assets.
[2:25] Speaker 2: Lulu says this ban goes beyond a crackdown on a
[2:28] Speaker 2: few brokerages and investors. It's a bigger push by Beijing
[2:32] Speaker 2: to tighten control over money leaving the country, especially the
[2:36] Speaker 2: overseas flows from wealthy Chinese investors. And while it's impossible
[2:41] Speaker 2: to track just how much money flows out of the country.
[2:44] Speaker 2: One estimate says that last year alone, roughly eight hundred
[2:47] Speaker 2: and seven billion dollars left China. That's about four percent
[2:52] Speaker 2: of the country's annual gross domestic product, and it's the
[2:55] Speaker 2: highest single year outflow on record.
[2:58] Speaker 1: They want to map Chinese offshore wealth and show that
[3:02] Speaker 1: moving assets offshore doesn't put these people, these rich people,
[3:05] Speaker 1: beyond the reaches of authority, and ultimately it's controlling the
[3:11] Speaker 1: money flow and making sure that the money is taxed.
[3:22] Speaker 2: This is the Big Take Asia from Bloomberg News. I'm Wanha.
[3:26] Speaker 2: Every week we take you inside some of the world's
[3:28] Speaker 2: biggest and most powerful economies and the markets, tycoons and
[3:32] Speaker 2: businesses that drive this ever shifting region. Today in the
[3:37] Speaker 2: show China's crackdown on offshore trading, What Beijing is doing
[3:42] Speaker 2: to stop capital from leaving the country, and why it
[3:45] Speaker 2: now needs that money more than ever. In late May,
[3:57] Speaker 2: the China Securities Regulatory Commission, along with seven other government agencies,
[4:02] Speaker 2: announced a sweeping crackdown on what it called illegal cross
[4:07] Speaker 2: border trading. Authorities said they'll penalize brokerages, Futu, Tiger Brokers,
[4:13] Speaker 2: and long Bridge Securities for operating on the mainland without
[4:16] Speaker 2: a license, and they said they'll confiscate what's described as
[4:20] Speaker 2: illegal gains, both in China and overseas. This affects hundreds
[4:25] Speaker 2: of thousands of Chinese investors who used the popular apps.
[4:31] Speaker 2: Now Lulu China is clamping down obviously on Chinese people
[4:36] Speaker 2: who are investing money overseas. Why is this happening, Well, you.
[4:41] Speaker 1: First have to understand that investing in China isn't like
[4:45] Speaker 1: in the US or Europe. Money cannot flow freely out
[4:50] Speaker 1: of the country. There is a capital control mechanism in China.
[4:54] Speaker 1: They have a cap in terms of how much people
[4:56] Speaker 1: can convert in terms of foreign exchange every year. The
[5:00] Speaker 1: quota is fifty thousand US dollars per person.
[5:04] Speaker 2: Now, if you're a Chinese national, why would you want
[5:07] Speaker 2: to invest your money outside China.
[5:10] Speaker 1: US stocks have been going bunkers this past year. It's
[5:14] Speaker 1: a lucrative trade and the returns are pretty handsome compared
[5:18] Speaker 1: with Chinese domestic stock market. I think it also follows
[5:22] Speaker 1: a broader shift and sentimentum on Chinese households. You remember
[5:26] Speaker 1: after the COVID lockdowns, and then China had also the
[5:31] Speaker 1: tech sector clamp downs, seizing things push for common prosperity.
[5:36] Speaker 1: All of these things intertwined, and it really settled both
[5:40] Speaker 1: the wealthy and middle class segments of the population. And
[5:44] Speaker 1: you compound that with property prices following youth unemployment. A
[5:49] Speaker 1: lot of affluent families see holding offshore assets more than
[5:54] Speaker 1: just diversification. It's also about having a form of insurance
[5:59] Speaker 1: and protecting their wealth.
[6:01] Speaker 2: But this demand from Chinese investors to move money overseas
[6:05] Speaker 2: quickly outgrew the handful of legal channels to do it.
[6:09] Speaker 1: Those with at least five hundred thousand yuan in their
[6:13] Speaker 1: local brokerage accounts, they can buy Hong Kong list of
[6:16] Speaker 1: companies through this thing called Stock Connect program, but to
[6:20] Speaker 1: get exposure, they have to purchase funds that participate in
[6:25] Speaker 1: this program called QD. It stands for Qualified Domestic Institutional
[6:30] Speaker 1: Investor Program, and that program has a cap of one
[6:34] Speaker 1: hundred and seventy six billion combined, but that really is
[6:38] Speaker 1: a fraction of the country's twenty five trillion household savings.
[6:42] Speaker 1: And the QD programs have been so popular. Every time
[6:45] Speaker 1: they release a new quota, it just gets snatched up.
[6:48] Speaker 1: That really drove a lot of them to these platforms
[6:51] Speaker 1: that operated in a gray zone.
[6:55] Speaker 2: In the gray zone trading platforms like Futu, long Bridge,
[6:59] Speaker 2: and Tiger. They became popular with Chinese citizens because they
[7:03] Speaker 2: offer lower trading fees and more stock choices compared to
[7:07] Speaker 2: the approved channels.
[7:09] Speaker 1: All of these apps the reason that they took off
[7:12] Speaker 1: is because they're quite easy to use. They can just
[7:14] Speaker 1: open an account from the mainland and then start trading
[7:18] Speaker 1: US assets from there. They could park their money from
[7:22] Speaker 1: the mainland into these accounts, and then the platforms would
[7:26] Speaker 1: give them access to overseas assets.
[7:29] Speaker 2: And so before the government cracked down, all these Chinese
[7:33] Speaker 2: investors were not paying taxes on the money that they
[7:36] Speaker 2: were making through offshore trading. So, really, are Tom and
[7:40] Speaker 2: all these investors who were trading offshore, were they essentially
[7:44] Speaker 2: dodging taxes?
[7:46] Speaker 1: Yeah? They were. China has always had laws stating that
[7:51] Speaker 1: they tax global income, including investment gains, for its citizens,
[7:57] Speaker 1: except that it never really implemented this rule until quite recently.
[8:04] Speaker 2: Chinese authorities have tried to rein in foreign investment. Before
[8:09] Speaker 2: back in twenty twenty two, platforms like Futu were banned
[8:12] Speaker 2: from helping mainland investors open new trading accounts, but there
[8:17] Speaker 2: was a loophole, existing clients like Tom were somehow allowed
[8:21] Speaker 2: to keep trading. There aren't any official figures on how
[8:25] Speaker 2: much money is flowing out of the country illegally, but
[8:29] Speaker 2: one estimate from the Institute of International Finance put the
[8:32] Speaker 2: total outflow last year at more than eight hundred billion dollars.
[8:37] Speaker 2: But it's not just offshore trading that's draining money out
[8:40] Speaker 2: of China.
[8:42] Speaker 1: There's the traditional good old just taking sacks of money
[8:46] Speaker 1: across the border. Why not.
[8:50] Speaker 2: My bars of gold under my bed, let me get
[8:52] Speaker 2: it out.
[8:52] Speaker 1: Yes, actually there was a case quite recently some lady
[8:56] Speaker 1: just tied all the money in one of those tailors
[9:00] Speaker 1: vests and was caught at the border. There's also something
[9:04] Speaker 1: called smurfing. China has the cap in terms of how
[9:07] Speaker 1: much people can convert in terms of foreign exchange every year,
[9:11] Speaker 1: so they just group a bunch of people who haven't
[9:15] Speaker 1: used their quotas and then use that to move money abroad,
[9:19] Speaker 1: and then these people get paid as a reward. There's
[9:22] Speaker 1: also underground banks, which have been very well documented phenomenon.
[9:28] Speaker 1: There is also cryptocurrency in the wild days macal casinos,
[9:34] Speaker 1: so Chinese people would just go to Macau and they'd
[9:37] Speaker 1: swipe their cards. Union pay at the time allowed them
[9:41] Speaker 1: to swept their cards and then they could take out
[9:43] Speaker 1: cash as a refund. China has cracked down on all
[9:47] Speaker 1: of these channels.
[9:50] Speaker 2: Why is China concerned about these large scale capital outflows
[9:55] Speaker 2: at this point?
[9:57] Speaker 1: The control is there to ensure financial market stability and
[10:02] Speaker 1: ensure that currency fluctuation is within boundaries. But if you
[10:08] Speaker 1: talk to economists, they'll argue, oh, the government isn't worried
[10:12] Speaker 1: about capital flight at all, because the yuan has become
[10:15] Speaker 1: a stronger currency this year and recent flow data points
[10:19] Speaker 1: to moderating pressure. I think it depends on the framework
[10:23] Speaker 1: of how you look at things. So if you take
[10:26] Speaker 1: the framework of looking at it from authorities how they
[10:30] Speaker 1: deal with businesses and its financial market, it's always been
[10:35] Speaker 1: about control, right. Control has been the dominant rational. So
[10:39] Speaker 1: this crackdown is a further example of the government trying
[10:42] Speaker 1: to close off these channels through which wealthy Chinese can
[10:46] Speaker 1: reduce their dependence on the mainland. And then from the
[10:49] Speaker 1: tax perspective, part of the objective is also to control
[10:55] Speaker 1: to the extent that they can map offshore wealth and
[10:57] Speaker 1: also identified beneficial owner, and it's increasingly clear that to
[11:03] Speaker 1: these rich folks, moving your assets offshore doesn't put you
[11:07] Speaker 1: beyond the reach of authorities.
[11:10] Speaker 2: After the break, why China needs to keep its money
[11:13] Speaker 2: on shore and how far it will go to tax
[11:16] Speaker 2: those overseas gains. In its crackdown on illegal cross border trading,
[11:39] Speaker 2: China threatened to slap steep penalties on brokerages that Beijing
[11:43] Speaker 2: said violated the country's securities law. The market reaction was immediate.
[11:48] Speaker 2: Here's Bloomberg's luluchen a tank.
[11:51] Speaker 1: The shares of Putu and Tiger has about six billion
[11:56] Speaker 1: of assets from mainland clients, and the segment accounts for
[12:01] Speaker 1: about twenty five percent of its revenue. Who has twenty
[12:05] Speaker 1: six billion of assets for mainland clients and accounts for
[12:09] Speaker 1: about twenty percent of its revenue.
[12:13] Speaker 2: Both brokerages and a third long Bridge, said they'll cooperate
[12:17] Speaker 2: with regulators and comply with the new rules. But this
[12:21] Speaker 2: isn't just about bringing a few brokerages into line. Lulu says.
[12:25] Speaker 2: It reflects a broader shift in how Beijing is thinking
[12:28] Speaker 2: about offshore wealth, especially right now.
[12:34] Speaker 1: China is always said by law, the old taxi citizens
[12:38] Speaker 1: based on global income, but it's never implemented it before. Now,
[12:43] Speaker 1: with the economy the plummet in property prices, it's pushing
[12:48] Speaker 1: the government to look for new sources of revenue. In fact,
[12:51] Speaker 1: we tally the figures and China property related revenue for
[12:56] Speaker 1: local governments have plunged forty eight percent over the past
[12:59] Speaker 1: five years through twenty twenty five.
[13:02] Speaker 2: Those local governments are hurting. Many of them borrowed heavily
[13:06] Speaker 2: to fund property ventures, and now that the bottom has
[13:09] Speaker 2: dropped out of that market, they're struggling to service their debts.
[13:13] Speaker 2: They've been working hard to find new sources of tax
[13:16] Speaker 2: revenue and they've had some success. Nationwide, tax revenues from
[13:21] Speaker 2: personal income reached a record about two hundred and forty
[13:23] Speaker 2: billion dollars last year, but it's not enough, so they're
[13:27] Speaker 2: turning their attention to investors in foreign assets. Lulu says
[13:32] Speaker 2: the push is still in its early stages.
[13:35] Speaker 1: It's really different for each city, each region though tax
[13:38] Speaker 1: bureaus when they call you up, but what we've heard
[13:41] Speaker 1: that's consistent is they're retroactively applying these taxes to at
[13:45] Speaker 1: least twenty eighteen in some cases. We have also heard
[13:49] Speaker 1: like even further and what the people need to pay
[13:52] Speaker 1: for is the twenty percent on investment gains and then
[13:56] Speaker 1: also a penalty fee for not paying taxes. Among the
[14:01] Speaker 1: cases that we've been told, some people actually can negotiate
[14:05] Speaker 1: with a tax bureau how much they get fined and
[14:07] Speaker 1: how much they pay, and it's simply because the amount
[14:10] Speaker 1: that they have to pay is so so significant.
[14:14] Speaker 2: China's drive to keep investors' money within its borders has
[14:18] Speaker 2: cut off most avenues for wealthy Chinese to move their
[14:21] Speaker 2: money offshore. Lulu says any long term fallout will depend
[14:26] Speaker 2: on how the nation's wealthiest citizens respond and if the
[14:29] Speaker 2: Chinese government offers other investment alternatives.
[14:33] Speaker 1: Some of the rhetoric that's come out after these crackdowns
[14:37] Speaker 1: is that, oh, this is China preparing for a more
[14:40] Speaker 1: relaxing of official channel so they can make sure that
[14:44] Speaker 1: everything is transparent and within legal boundaries, and it's paving
[14:48] Speaker 1: the way for more relaxation down the road. And that
[14:53] Speaker 1: certainly is a very optimistic way of looking at things.
[14:56] Speaker 1: It's really unclear at this point what the next policy
[15:00] Speaker 1: will be.
[15:01] Speaker 2: It's an uncertain time for wealthy Chinese and for the
[15:05] Speaker 2: investment community. Lulu says the ripple effects from this crackdown
[15:09] Speaker 2: will likely spread beyond a handful of online brokerages and
[15:13] Speaker 2: beyond China Putu.
[15:15] Speaker 1: They were a huge player in the IPO market in
[15:18] Speaker 1: Hong Kong, and then the whoores of law firms, financial advisors,
[15:22] Speaker 1: investment funds all centered around how to help Chinese citizens
[15:27] Speaker 1: manage their money overseas.
[15:29] Speaker 2: Banks and investment firms with heavy exposure to mainland clients
[15:33] Speaker 2: are working hard to figure out what's next. In the meantime,
[15:37] Speaker 2: they're double checking their client's investments and weighing the needed
[15:40] Speaker 2: steps to avoid falling afoul of Beijing.
[15:44] Speaker 1: All the global banks have benefitted from China's wealth boom.
[15:48] Speaker 1: From HSBC, UBS, JP, Morgan Goldman everyone. I would say
[15:54] Speaker 1: that the offshore banks immediately following this crackdown for offshore trading,
[16:00] Speaker 1: they might enjoy a short term boom in fact, because
[16:05] Speaker 1: all the clients who need advice consulting services, But long term,
[16:10] Speaker 1: it really is about how the Chinese wealthy react to this.
[16:15] Speaker 1: It makes how to service Chinese clients offshore very tricky
[16:20] Speaker 1: because everyone would need to be concerned about whether they'll
[16:23] Speaker 1: become the next Futu or tiger. Lots of regulatory landmines
[16:28] Speaker 1: to navigate, and it does make the business a lot
[16:32] Speaker 1: more complicated for these global banks.
[16:36] Speaker 2: Well, I want to zoom ount to the rest of
[16:37] Speaker 2: the world a bit if Chinese authorities are able to
[16:41] Speaker 2: successfully trap and keep capital so it stays in the mainland.
[16:46] Speaker 2: What's the impact you think on global markets where Chinese
[16:50] Speaker 2: investors have been parking their money.
[16:52] Speaker 1: To put things into perspective, if we're sticking with the
[16:56] Speaker 1: figures that these two firms have disclosed, which is about
[17:00] Speaker 1: thirty billion dollars, that's a drop in the bucket compared
[17:05] Speaker 1: with the US stock market a US stock market as
[17:07] Speaker 1: well like seventy trillion, So it won't move the dial
[17:11] Speaker 1: on the US market. It has an impact for people
[17:15] Speaker 1: who have benefited from Chinese consumers, and that could be
[17:21] Speaker 1: anything from the property market, Hong Kong's property market, especially
[17:25] Speaker 1: now that's so reliant on mainland buyers, but also like
[17:29] Speaker 1: property markets in Australia and even the US where Chinese
[17:34] Speaker 1: buyers are a significant force among if not ranked like
[17:38] Speaker 1: the top among foreign buyers.
[17:41] Speaker 2: Lulu, what do you think is endgame here for China?
[17:45] Speaker 1: They want to map Chinese offshore wealth and show that
[17:48] Speaker 1: moving assets offshore doesn't put these rich people beyond the
[17:51] Speaker 1: reaches of authority. One of the people I interviewed said
[17:56] Speaker 1: that the risks are just not worth it, So he's
[18:00] Speaker 1: going back to the A shirt market, the most tech market,
[18:03] Speaker 1: to trade Chinese domestic shares.
[18:06] Speaker 2: And I guess that's in the end, that's what the
[18:07] Speaker 2: Chinese government wants.
[18:08] Speaker 1: Right, Yes, that is.
[18:18] Speaker 2: This is The Big Take Asia from Bloomberg News. I'm wanha.
[18:22] Speaker 2: To get more from The Big Take and unlimited access
[18:25] Speaker 2: to all of Bloomberg dot com, subscribe today at Bloomberg
[18:28] Speaker 2: dot com slash podcast offer. If you liked the episode,
[18:31] Speaker 2: make sure to subscribe and review The Big Take Asia
[18:34] Speaker 2: wherever you listen to podcasts. It really helps people find
[18:37] Speaker 2: the show. Thanks for listening. To see you next time.

Shows are listed from Apple Podcasts' charts and directory, and Podcast Index where it is used. Every show and episode belongs to its publisher and plays from the publisher's own feed; this site hosts none of them.