China's Offshore Trust Tax Drives Billionaires into Liquidity Trap

China has made a new rule about a special kind of savings account called an offshore trust, which rich families keep in places like Hong Kong and Singapore.

For the first time, money in these trusts now counts for China's income tax, and the government wants a 20% share of certain profits.

The very rich families have until October 22 to tell the government what they own and pay the tax they owe.

Many rich families are surprised because they thought money kept outside China was hidden from the tax man.

They are also discovering that being rich doesn't always mean having spare cash, because their money is tied up in companies and houses that are hard to sell quickly.

Even getting a passport from another country doesn't automatically get them out of paying, if their lives and businesses are still mainly in China.

The government had already been testing these rules in cities like Shanghai, Jiangsu and Shenzhen before making them national.

Hong Kong and Singapore still want the rich families to stay, so they keep offering welcome mats like tax incentives.

The new rules don't make trusts illegal, but they make rich families think more about honesty and planning than about hiding money.

In the end, the biggest question for these families isn't just how much money they have, but how quickly they can turn it into cash to pay the bill.