A sense of 'betrayal'

An increasing number of wealthy Chinese businesspeople hold permanent residence permits for Western countries or have taken foreign nationality, but continue to operate highly profitable enterprises in China.

One high-profile example is Zhang Lan, chairwoman of South Beauty Group, known for her high-end restaurant chain. Last year, the revelation that she holds a foreign passport sparked a heated debate about the emigration of rich Chinese. Many people lashed out at Zhang on Internet forums, castigating her for her unpatriotic "betrayal".

"During the past two or three years, it has become a trend among wealthy entrepreneurs to obtain permanent residence permits abroad or hold foreign citizenship, but they stay in China to run their businesses," said Sun Changgang, an immigration lawyer at W&H Law Firm in Beijing.

However, as Sun noted, more than one-third of the cases he's worked on in the past three years have been related to illegal dual citizenship. Chinese people are not allowed to hold dual nationality, although there are no restrictions on them adopting a foreign nationality. However, if they do so, they are required to renounce their Chinese nationality.

But a loophole exists. The person involved is legally obliged to inform the place where they hold hukou, the Chinese residency permit, and ask to have their Chinese nationality revoked. Unsurprisingly, many wealthy entrepreneurs simply fail to inform the relevant authorities of their change of status, thus allowing them to hold two nationalities illegally and reap the benefits.

"Stricter regulations should be issued to prevent entrepreneurs who hold foreign nationality from using their now-illegal Chinese citizenship to benefit their companies," said Sun.

He added that a permanent residence permit is the preferred option for many businesspeople, as it allows them to retain their Chinese citizenship and doesn't affect their businesses in the country.

But ownership of a foreign permanent residence permit doesn't come cheap. Song Jianning, 53, general manager of the Chinese branch of a German company in Shanghai, spends at least 520,000 yuan ($83,600) a year to maintain his family's permanent residence permits for the United States.

"To keep our permits, we have to arrange three trips and fly to the US to get an inbound stamp every year," he said.

Song and his wife started planning their permit applications in 2008 via the US EB-5 visa program, which is designed to attract foreign investors to the country.

Under the provisions of the program, foreigners will be awarded a green card if they invest $500,000 or more in a business or government project that creates 10 or more jobs within two years of the initial investment.

After spending two years studying hundreds of projects and business plans, Song eventually chose to invest in a US government project in Virginia in 2010. He obtained his green card a year later.

"My current plan is to retire to the US with my wife and children in the near future," said Song, who has bought a house in Washington, which he rents out to local people.

Many extremely wealthy Chinese have taken advantage of the EB-5 visa program. Almost 6,000 Chinese obtained the visa between October 2011 and September 2012, a tenfold rise from the same period in 2007-08, according to statistics released by the US State Department in October 2012.

"The fundamental condition for maintaining a permanent residence permit is to have as much money as possible, because the expense is much higher than we had expected," said Song, who earns about 4 million yuan a year.

Every year, he has to pay general tax of $60,000, plus $21,600 in property tax. He also has to pay an accountant $2,000 to file the taxes with the US authorities.