China economy

Household wealth in China to reach US$39 trillion in 2022, says Credit Suisse

Number of millionaires might surge by 41pc to 2.7 million in the same period

PUBLISHED : Wednesday, 15 November, 2017, 7:17pm
UPDATED : Wednesday, 15 November, 2017, 10:38pm

China’s household wealth is forecast to increase by about US$10 trillion to reach US$39 trillion in 2022, and it will be a major contributor of wealth growth globally in the next five years, according to Credit Suisse.

The number of millionaires in China might surge by 41 per cent to 2.7 million in the same period, becoming the country with the third-largest number of millionaires after the United States and Japan, Credit Suisse said in its Global Wealth Report, which was compiled from data on the wealth holdings of 4.8 billion adults across about 200 countries.

At the same time, the global economy is projected to add another 719 billionaires in the next five years, taking their tally to nearly 3,000, with close to 30 per cent coming from China, the Swiss financial service company said.

The surge in household wealth reflects gains in China’s asset prices, including its market capitalisation and house prices. Gains in global equity markets have also been matched by similar increases in non-financial assets, which moved above the pre-crisis year 2007’s level for the first time this year.

“A decade since the start of the global financial crisis, we see a significant increase in wealth across all regions of the world,” said Urs Rohner, chairman of the Credit Suisse Research Institute and chairman of the board of directors at Credit Suisse Group.

While aggregate wealth in Asia-Pacific increased to a record high of US$89 trillion in 2017, median wealth across the region grew by just 0.2 per cent, suggesting income inequality that is edging higher.

“In terms of GDP per capita, China is still poor and has a fair amount of catching up,” said Alan Oster, group chief economist at National Australia Bank.

Countries with lower levels of wealth inequality continue to have higher median wealth per adult, with Switzerland and Australia being the two highest in the world at US$229,000 and US$195,400, respectively, Japan seventh with US$123,700 and Singapore ninth with US$108,900. China is not among the top 10.

Number of rich Chinese rises nearly nine-fold in decade, survey suggests

In general, millennials globally will experience greater wealth inequality than previous generations, and face challenges such as tighter mortgage rules, increasing house prices, increased income inequality and lower income mobility, Credit Suisse said.

Last month, President Xi Jinping said at the 19th party congress that China had shifted from a stage of high-speed growth to high-quality growth, and called for a narrowing of the gap between rich and poor, and for structural reforms and technological improvements to modernise the economy.

China clearly does not want to be cursed by the “middle income trap”, DBS Bank economists including Chris Leung and Nathan Chow wrote in a research note recently. Middle income trap

is a situation where a country attains a certain income and gets stuck at that level.

“The authorities know well that artificial wealth creation via inflation of the property bubble is a precarious route.”