December 3, 2023

Economix: Ranks of the Rich Growing in China

HONG KONG — China’s economic boom has made many Chinese very wealthy indeed. A new study by the consulting firm Bain Company shows just how many — and how rapidly — the ranks of the rich are swelling in this country of 1.3 billion.

Bain estimates that the number of high-net-worth individuals — mostly first-generation entrepreneurs who have more than 10 million renminbi, or about $1.5 million, in investable assets — will grow to 585,000 this year. That’s twice the number than in 2008. Moreover, the number of individuals who are worth more than 100 million renminbi is rising at its fastest pace.

‘‘Wealth creation in China is marching on unimpeded,’’ said Johnson Chng, Bain’s chief of financial services in greater China and the author of the study.

The greatest concentration of millionaires and multimillionaires are in Beijing; Shanghai; the provinces of Zhejiang and Jiangsu, which are adjacent to Shanghai; and the southern province of Guangdong. More than 30,000 high-net-worth individuals live in each of these areas.

But central and western areas of China have the speediest growth rates. In provinces like Sichuan, Hunan and Hubei, and the Bohai Bay basin (including Tianjin and Liaoning) the number of rich soared by a rate of 31 to 40 percent a year from 2008 to 2010, according to the Bain study, which was conducted in collaboration with China Merchants Bank.

This echoes — and highlights — the gradual, partially Beijing-engineered shift of economic wealth and activity away from the coastal areas into the country’s more underdeveloped interior.

All this may be good news for companies wishing to cash in on the increasing affluence to be found in China (and many other rapidly growing Asian countries).

Luxury-goods makers and retailers from Luis Vuitton to Samsonite to Ermenegildo Zegna have spent considerable time, effort and cash into rolling out a formidable presence in China. So for that matter have banks, which have been racing to build their private banking business. And China’s rich increasingly trust and use such services: 45 percent cited these as major investment channels in the Bain study, up from only 15 percent in 2008 — though the bulk of that business currently goes to domestic, rather than overseas, banks.

For the authorities in Beijing, however, the rapidly widening wealth gap in China is an increasing concern. Many commentators now consider it as one of the country’s most pressing economic problems.

Striking truckers in Shanghai, angered by the sharp rise in fuel prices in recent months, this week hammered home an important point: many millions of Chinese have missed out on the wealth boom spotlighted by the Bain report.

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