Xi Has Taught China’s Wealth Owners Their Most Expensive Lesson Xi Jinping has fundamentally changed China’s legal environment. For China’s wealth owners, four measures matter most: • The Supervision Law (2018; revised 2024) — transformed the risk to personal liberty. • The Counter-Espionage Law (2023) — vastly expanded the boundaries of “national security.” • The new offshore trust tax rules (July 2026) — fundamentally changed the calculation of wealth protection. • The new Exit-Entry Regulations (August 2026) — strengthened the state’s control over mobility and the ability to leave. For decades, the typical Chinese tycoon believed he could continue living in China, keep his business and political relationships there, leave part of his family there, but place his shares, cash and investments in Hong Kong, the Cayman Islands, BVI or an offshore trust, obtain foreign residency or even a second passport, and thereby continue enjoying China’s economic upside while placing his core wealth beyond the Party’s reach. That assumption has collapsed. Almost every entrepreneur I have known over the past three decades underestimated the ruthlessness of the CCP. Ironically, those who understood the risks best were often the red aristocrats. They had witnessed the Party’s campaigns, purges and expropriations from the inside. Many private entrepreneurs, by contrast, had studied too little of modern Chinese history. One phrase I heard many times was: “All my wealth came from China. If one day the government wants it back, I am happy to give it back.” This was not merely public relations language used by people such as Jack Ma of Alibaba or Richard Liu of JD. Entrepreneurs often said it directly to my face when I urged them to diversify their wealth outside China. I suspect many never truly believed that day might actually come. For most wealth owners, it is probably too late now. If the individual remains in China, the state holds the decisive leverage: exit bans, investigation, summons, detention, tax enforcement, and pressure applied through trustees, banks or family members. An offshore trust may protect assets in an ordinary civil dispute. It cannot reliably protect a settlor who remains physically inside an authoritarian state. If the wealth still originates from Chinese companies, dividends, red-chip structures, property sales or family transfers, the authorities can pursue it through tax residency, foreign exchange rules, beneficial ownership and source-of-funds investigations. A foreign passport, by itself, does not end Chinese tax exposure. What matters is where you actually live, where your family is, where your economic interests remain, and whether China still regards you as a tax resident. If your spouse, children, parents, beneficiaries or family business remain in China, the state still retains substantial leverage. I am convinced Beijing thought carefully about the sequence before introducing these measures. The offshore trust rules and the new Exit-Entry Regulations were not introduced because the leadership feared wealthy Chinese might start running. They were introduced because Beijing believes the window for most of them to escape has already closed. For decades, many Chinese entrepreneurs misunderstood the true nature of the CCP. The boom years convinced them that the Party itself may have fundamentally changed—that the political risks of the Mao era belonged to history. At the same time, the extraordinary opportunities created by China’s economic boom made the upside of staying fully invested in China seem far greater than the cost of preparing for a much darker future. Xi Jinping did not fundamentally change the nature of the CCP. He just reminded China’s entrepreneurs what it had always been capable of. For many, the risks they dismissed have become reality. Perhaps foreign investors should pay close attention to the lesson being taught—at the expense of China’s entrepreneurs.