Keep pulling the thread on Lulu Chen.
Chinese regulators have mandated that unauthorized brokerage apps must unwind all assets of mainland Chinese clients within a two-year period.
An estimated $807 billion in capital left China last year, representing approximately 4% of the country's GDP and marking the highest single-year outflow on record.
In late May, the China Securities Regulatory Commission and seven other government agencies announced a crackdown on illegal cross-border trading, penalizing brokerages Futu, Tiger Brokers, and Longbridge Securities.
China has existing laws to tax the global income of its citizens, including investment gains, but has only recently begun to enforce them.
The Institute of International Finance estimates that total capital outflow from China last year was over $800 billion.
Tiger Brokers holds approximately $6 billion in assets from mainland Chinese clients, a segment that accounts for about 25% of its revenue.
Futu holds approximately $26 billion in assets from mainland Chinese clients, a segment that accounts for about 20% of its revenue.
China's property-related revenue for local governments is projected to plunge by 48% over the five-year period ending in 2025.
Chinese tax authorities are retroactively applying taxes on overseas investment gains to at least the year 2018.
Chinese citizens are required to pay a 20% tax on overseas investment gains, in addition to a penalty fee for prior non-payment.
A primary goal of China's crackdown on offshore trading is to map the offshore wealth of its citizens and demonstrate that these assets remain within the government's reach.
Chinese citizens are technically not permitted to buy and sell shares in foreign markets, with the exception of a few authorized channels.