Every two years, The China Private Wealth Report provides an insider’s look at the private Chinese economy. The most interesting statistic from the most recent issue is the rising number of high net worth individuals in the country.
High net worth is defined by the report as people who have a minimum of 10 million Yuan, which translates to around $1.47 million, of assets to invest.
In 2016, 1.6 million people were defined as high net worth. This is 9 times as many high net worth Chinese as there were in 2006, and the number is expected to rise even more in the coming months. The market for private investment in China was 165 trillion Yuan in 2016, and the market grew at a rate of 21% between 2014 and 2016.
What do all of these numbers really mean? It means that Chinese private wealth is quickly catching up to private wealth in the United States. China now contains the fourth highest number of high net worth individuals in the world. The only countries that outpace China are Germany, Japan and the United States.
Beijing, the capital of China, routinely beats New York in terms of being a wealth magnet for the elite business class of the world.
This sort of economic growth in the private sector bolsters economic growth throughout China. Over the past 20 years, the country has lifted 730 million of its own population from poverty. Currently, 70 million Chinese people still function below the poverty line; however, the Chinese government has pledged to lift an additional 3.4 million people out of poverty this year.
One of the more interesting effects of increased Chinese wealth is the propensity of these rich Chinese to emigrate into other countries. The United States is one of the favored destinations for these people, with just under 82,000 rich Chinese being granted permanent resident status in 2011 and in 2012. However, there are more popular destinations for rich Chinese, including Toronto, Vancouver, Singapore, Australia and Hong Kong.
The Chinese actually make up 70% of all people in the new wealth hub of Singapore. Toronto is more than 11% Chinese, with more than 280,000 people coming from the Chinese mainland to live there. In Australia, around 90% of all immigrant investors are Chinese nationals.
In short, Chinese wealth is spreading around the world. A great deal of this wealth is not coming to the United States, although the country has traditionally been one of China’s largest trading partners. It may also be of concern to the American economy that Chinese wealth is increasing so rapidly. The United States is certainly not experiencing the same kind of growth except in certain sectors, among a very select few people.
These statistics should be a serious issue to anyone who is concerned about the economic health of the United States. Will America be able to complete in a future of Chinese wealth spread around the globe? What does this kind of money in different sectors of the world mean for American/Chinese politics, which are becoming more estranged as we speak?
The solution is in a reassessment of American values and in a recommitment to our own economy. The responsibility falls to conservatives, as it usually does when it comes to financial issues. However, conservatives must make a concerted effort to do more than just reduce expenses on the supply side of the American balance sheet. In order to keep up with Chinese wealth, America must begin to innovate again.
Saving money is one thing. However, no economy can save its way into being the number one economy on the planet. It is time for America to reinvest resources into its best and brightest, from the preschools and grammar schools that have showcased success to the promising research and development projects in the energy sector. We must support Donald Trump in his efforts to renegotiate American economic agreements around the globe as well. Innovation in America is no good if we are giving away all of the profits.
We must do this now, not later, because there is absolutely no time to waste when it comes to China. They are moving ahead economically and politically, and they threaten to remove the United States from its historic position of primacy in many global markets.
Regards,
Ethan Warrick
Editor
Wealth Authority
