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China on track to overtake Japan in household wealth: Credit Suisse

Growth in assets held by mainland's middle class set to push country into second spot behind US by 2017, report says

PUBLISHED : Thursday, 11 October, 2012, 12:00am
UPDATED : Thursday, 11 October, 2012, 3:03am

China could overtake Japan as the second-wealthiest country in the world by household assets in five years on the back of a booming middle class and rapid growth in ultra-high-net-worth individuals, according to Credit Suisse Group.

The Swiss bank defines household wealth as financial assets plus real assets, such as property, owned by households, minus debt.

China, the world's second-largest economy, is expected to add US$18 trillion in household wealth by 2017, bringing the country's total to US$38 trillion, according to Credit Suisse's third annual global wealth report. That would surpass Japan's US$35 trillion, but be less than half the expected wealth of US$89 trillion in the US by 2017.

"If we look at the very top end of the wealth pyramid, in terms of billionaires and ultra-high-net-worth individuals, China is expected to have a higher number of these high wealth holders than Japan," said Fan Cheuk-wan, the head of Asia-Pacific research for Credit Suisse's private bank.

Fan said that Japan was still expected to have more millionaires compared with China in five years, with estimated figures reaching 5.4 million in 2017 for Japan and 1.9 million for China.

China has stood out as the most important wealth generator in the Asia-Pacific in the past decade. Its household wealth has grown at an average of 13 per cent a year since 2000.

The Asia-Pacific overtook Europe as the world's largest wealth-holding region in the middle of this year, as Europe shed US$10.9 trillion of household assets, accounting for 88.6 per cent of total global wealth loss between the middle of last year and this year.

Last month, a report by consulting firm Capgemini and RBC Wealth Management also said that the Asia-Pacific overtook North America to become the region with the largest population of high-net-worth individuals for the first time last year.

Credit Suisse forecasts that household wealth in the Asia-Pacific will rise 55 per cent to US$115 trillion by 2017, raising the region's share of global wealth by 6 percentage points to 35 per cent.

Total global household wealth fell 5.2 per cent, or US$12.3 trillion, to US$223 trillion from mid-2011 to mid-2012. It marked the first decline since the global financial crisis in 2008, during which global household wealth declined by 14.6 per cent, or US$31.4 trillion.

The US, China and Japan were the top three contributors to global wealth growth. The US posted growth of US$1.32 trillion, or 2.2 per cent, in household wealth over the period.

China was next with a rise of US$562 billion, or 2.9 per cent, while Japan's household wealth rose by US$368 billion, or 1.3 per cent.


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