Canada's misguided pitch to rich Chinese immigrants
How very Canadian a piece of foolishness. The province of Quebec pitches wealthy mainlanders to immigrate to Montreal with promises of Canadian citizenship. But when they come they stay in Vancouver, where they wanted to be all along.
How very Canadian a piece of foolishness. The province of Quebec pitches wealthy mainlanders to immigrate to Montreal with promises of Canadian citizenship. But when they come they stay in Vancouver, where they wanted to be all along.
You can't stop people from going anywhere they want to go in Canada once they become Canadian citizens and anyway, who wants to live through a Montreal winter?
However, the C$800,000 (HK$5.54 million) non-interest-bearing loans that mainland applicants must pay for the privilege are then turned over to the Quebec government because Quebec is where they said they would go, while British Columbia gets nothing.
Let's parse this silliness a little further. In the first place we have the typical misunderstanding of bureaucracies round the world that these wealthy immigrant programs actually create a net increase in new investment. They do not.
Follow the money. Mainlanders living in the mainland do not own Canadian dollars. There is nothing you can buy with a Canadian dollar in Chengdu. Only yuan will serve the purpose there.
Thus in order to raise C$800,000, the mainlander sneaks 4.42 million yuan (HK$5.59 million) through Beijing's supposedly tight capital controls and takes them to a Canadian bank where he exchanges them for his Canadian dollars.
What you then have is a Canadian bank with 4.42 million yuan more and C$800,000 less in assets, and a mainland investor with 4.42 million yuan less and C$800,000 more in assets.
Now here is the big question. How many more Canadian dollars are really in existence after this transaction than were in existence before it?
Congratulations. You got it. Foreign investment does not create new money. That's just a myth perpetrated by bureaucrats who don't understand how money works.
And now let's look more closely at that C$800,000 loan to the government of Canada. It must be paid back in five years and it pays no interest.
The five-year Canada coupon runs at about 1.4 per cent at present, which puts the real value of this loan at about C$56,000 on a non-discounted basis, not C$800,000. It has to be about the world's cheapest wealthy immigrant program.
But I think British Columbia is probably better off without that money. As an ex-Vancouverite I have my doubts about the provincial government's ability to generate more from a five-year investment than it puts into it.
My guess is that provincial politicians would think of it as free money and forget that it must be paid back. They would then put it into social grants that yield great rewards of community inclusion and BC taxpayers would then have to pay up again five years later.
Here is your rule, as friends from Vancouver tell me it still is: If you want to keep money safe, keep it out of Premier Christy Clark's hands.
But Canada stipulates that the applicants must "show they have business experience". What an insult to existing Canadians. The International Monetary Fund rates Canada as the tenth richest country in the world with a gross domestic product per capita of US$52,000. China, number 82, has a GDP per capita of US$7,000. Yet Canada must go to China for business experience?
And then you have the Canadian complaint that some of this mainland business experience is not really the sort that was expected. Dodge-The-Taxman is a game that is played with much greater success and assiduity in China than it is in Canada and some of these mainland applicants bring their habits with them.
Canadians are thus sometimes surprised that people who are meant to have assets of least C$1.6 million when they apply for immigration do not appear to be nearly as well off when they fill in their tax forms.
Chinese entrepreneurial knavery meets Canadian government foolery. The two deserve each other, I say.
