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| Ashley Dudarenok |
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| Rupert Hoogewerf |
The number of ultra-high net-worth families in Greater China—those with at least US$30 million—reached 88,800 in 2017, rising 12.5% year-over-year, according to a Hurun Wealth Report released Tuesday. Beijing has 13,500 ultra wealthy families, the highest concentration in the region including China’s mainland, Taiwan, Hong Kong, and Macau. Compared to last year, the number in Beijing increased 19.5% or 2,200 families.
Shanghai placed second, with 12,000 families worth more than US$30 million, a number that increased 16.5%. It’s followed by Hong Kong, which has 8,500 ultra-wealthy families, increasing 6.3%.
The wealth increase is largely attributable to China’s economic growth and bull market throughout 2017, the report said. Last year, China’s GDP increased 6.9%, while both Shanghai and Shenzhen stock markets were up around 7%. The Hang Seng Index, the major stock market barometer in Hong Kong, soared 36%.
However, growth is expected to slow down in 2018, impacted by a potential U.S.-China trade war and a slumping stock market, the report said.
“The number of high-net-worth families grew at a lower pace in 2017 than the prior year,” says Rupert Hoogewerf, the Hurun Report’s chairman and chief researcher. “The potential U.S.-China trade war will certainly impact the wealth creation in 2018.”
The tension has already caused stock markets in Greater China to tumble. By early November, the Hang Seng Index fell more than 10%, the Shanghai Stock Exchange Composite Index and Shenzhen Component Index fell 20% and 30% respectively over the same period of time, according to the report.
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| Zhang Juwei |
The Gini coefficient - a measure of income inequality commonly used by economists and institutions - reached 0.47 in China in 2005, overtaking the recognized warning level of 0.4, according to the World Bank.
Although no new calculation has been released to gauge the latest situation of income inequality in China, the previous World Bank figure basically represents the nation's current situation and the gap is widening dramatically, said Zhang Juwei, professor and director of the labor and social security research center at the Chinese Academy of Social Sciences.
Zhou Tianyong, senior economist of the Party School of the Central Committee of the Communist Party of China, said in a recent article that in 2008, the Gini coefficient was 0.47 in China.
"When the Gini coefficient reaches around 0.5, it means the inequality problem is extremely severe and needs immediate action to bring it down," Zhang said...
As for solutions, analysts are divided on where the strongest measures should be taken. Zhang said the emphasis should be placed on the primary distribution of national income. "It is the root of the income distribution system. The government should do more to raise the proportion of laborers' incomes in the income basket, which has been declining for years," he said, adding that capital investment has been a major reason for the disproportionately high ratio of wealth held by the rich.
He said raising farmers' incomes is a practical measure and by doing that, the salaries of low-income groups like migrant workers would also go up.More at the China Daily.
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| Rupert Hoogewerf |
The world's billionaires are now worth $8 trillion, greater than the GDPs of Germany and France combined.
According to the latest Hurun Global Rich List, published by the China-based Hurun Report research unit, there are now 2,257 billionaires in the world — up 3 percent from last year.
Their combined fortunes jumped 16 percent over 2016, to the equivalent of 11 percent of the world's annual GDP. Their wealth was also larger than every country's individual GDP, other than the U.S. and China.
"Billionaires are concentrating wealth at a supercharged rate," Rupert Hoogewerf, Hurun Report's chairman and chief researcher, said in a statement.
Indeed, the number of billionaires has exploded over the past five years, rocketing 55 percent higher. Because much of the world's wealth is hidden or difficult to find, the actual number of billionaires may be closer to 5,000, Hoogewerf said.
"While some billionaires go to extraordinary lengths to conceal their wealth, for the most part it is that they are discreet and prefer operating under the radar," he said.More at CNBC.
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| Zhang Lijia |
But after decades of breakneck economic growth, the country’s wealth has ceased trickling down, bringing social mobility to a standstill. Chinese people have fewer opportunities to move up the socioeconomic ladder. State-controlled capitalism and corruption have led to the demise of the Communist ideal of a classless society.
A 2014 nationwide survey by a market-research company suggested that intergeneration mobility in China among the low- and lower-middle class has stagnated, and people from those groups had little confidence that they could improve their fate. Among those who self-identified as lower-middle class, 68 percent said their parents also belonged to the lower-middle class, and 87 percent of people in the lower class said their parents were in the same class. In short, the majority of lower class people in China are staying near the bottom of the class pyramid.
A Stanford report from earlier this year echoes what Chinese social scientists have found: China ranks high among countries in which citizens earn close to what their parents had earned. It is a country with low “intergenerational earnings mobility,” meaning China’s younger people are likely to be in the same socioeconomic class as their parents.
Research shows the bigger the income gap, the lower the social mobility. And the income gap has been widening steadily. A report from Peking University in January found China to be one of the most unequal societies in the world with the richest 1 percent holding a third of the country’s wealth.
When the rungs of the income ladder grow farther apart, it’s more difficult for people to climb upward.
More in the New York Times.While some 800 million people in China have been lifted out of poverty in the last few decades, the economic reforms have produced a new underclass of low-paid urban workers, including migrants from the country’s rural areas. The new lower class is stuck at the bottom.
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| Rupert Hoogewerf |
One of the main reasons behind the potential surge in the pension market is the rise in the number of Chinese HNWIs, or individuals with 10 million yuan of personal wealth or more, experts noted. There were 1.34 million such people of May 2016, up 10.7 percent year-on-year, said the report.
"For Chinese HNWIs, healthcare has surpassed financial investment and ranks first among the topics of concern in 2016," Rupert Hoogewerf, the chairman of the Hurun Report, said at the press briefing...
According to the report, the proportion of respondents who choose senior living communities after retirement has grown 13 percentage points from 2015 to 28 percent in 2016, while the group opting for retiring at home has contracted 20 percentage points to 57 percent in the same period.
"The aging group expects to lead colorful and relaxed lives, and also to travel extensively after retirement," Hoogewerf said.
Hoogewerf also noted that moving into senior living communities can not only address their needs, but also reduce pressures on their children who already face social burdens due to the one-child policy.More in Global Times.
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| Rupert Hoogewerf |
Rupert Hoogewerf, the founder of Hurun, attributed China's explosive wealth creation to Chinese market regulators allowing a flood of new initial public offerings after holding back new IPOs for several years.
Hoogewerf said his wealth calculations were made using stock prices as of Jan. 15, which means they took into account the Chinese market's 40 percent tumble over the past half year.
Had the calculations been made at the market's peak last summer, the number of Chinese billionaires would have been nearly 150, Hoogewerf said.
Beijing took the title from New York after minting 32 new billionaires last year, while New York gained four. Moscow came in third place, with 66 billionaires, while Hong Kong and Shanghai came in fourth and fifth with 64 and 50, respectively, Hurun said.
China's richest man, real estate tycoon Wang Jianlin, came in 21st place globally behind Wal-Mart scions, the Swedish family that owns Ikea and Brazilian investor Jorge Paulo Lemann. Other Chinese billionaires in the global top 100 included Alibaba founder Jack Ma, beverage magnate Zong Qinghou, and the tech bosses at phone maker Xiaomi, social media firm Tencent and Baidu, the search engine.
Hoogewerf said China had a particularly high proportion of self-made billionaires compared to the United States.
"What we showed today is that at the super-wealth creation level, the Chinese are now leading," Hoogewerf said. "People will look at China the same way that people looked at Stanford or Silicon Valley in the 1990s."More in AP.
