Chinese household assets surge 18pc, debt also soars, survey finds

Mainland Chinese households saw their financial assets increase at the second fastest pace worldwide, according to a 2017 wealth survey by Allianz

PUBLISHED : Thursday, 28 September, 2017, 12:27pm
UPDATED : Thursday, 28 September, 2017, 11:04pm

The wealth of Chinese families has increased sharply over the past year, underscoring the rising prosperity of the nation’s middle class, but also raising concerns over rising debt levels, according to an annual survey by Allianz.

In its latest Global Wealth Report, the German insurer estimated that China’s households recorded 17.9 per cent growth in financial assets last year, lifting the nation’s gross financial assets to 22.649 trillion (US$26.344 trillion).

Assets held by private banks in China surge 22pc in value

China ranked the No 2 fastest growing country worldwide in terms of percentage gains in financial assets, following Argentina’s 54.1 per cent growth.

However, Chinese households liabilities rose by 23 per cent and now account for 61 per cent of the total liabilities of Asia excluding Japan, said Allianz.

“Though [Chinese households’] overall debt ratio of 45.1 per cent is still comparatively low, the pace of the increase gives cause for concern,” said Allianz chief economist Michael Heise said in the Global Wealth Report.

Financial assets that were factored in by Allianz’s report include cash and bank deposits, receivables from insurance companies and pension institutions, securities and other receivables.

“Chinese households continued to diversify their asset portfolio away from deposits to more profitable wealth management products and securities, which profited from the gradual recovery of the stock markets,” the report said.

The report cautioned over rising debt levels, noting that 2017 was the first year since 2009 that global debt rose faster than GDP.

It noted rising debt levels in China brought on by broader access to financial services through all levels of society.

“The observed lending growth could also be taken as a sign of increasing financial deepening,” said Allianz.

With net wealth per capita amounting to US$12,765, China climbed to rank No 27 worldwide last year, up from 40th spot in 2000.

Japan, Taiwan and Singapore entered the top 20 globally in terms of net financial assets per capita last year.

In Asia, the average ratio between liabilities of private households and GDP is about 50.2 per cent.

The report also points out that while private households in Singapore, South Korea and Taiwan particularly favoured life insurance policies and pension funds, investors in China were mainly shifting their financial assets into securities and similar products.

“The sharpest drop [of bank deposits growth in Asia] occurred in China, where for some years private investors have increasingly been shifting their financial assets to asset management funds, which are often offered by banks, in the search for higher-yield products,” the report said.