Slowing Growth Hurting China’s Super Rich
Don’t tell China’s ultra rich that it hasn’t been a hard landing for the world’s second largest economy – Billionaires in the PRC have felt the brunt of the global economic crisis, according to a new study released Monday that shows their net worth decreasing by $160 billion over the last twelve months. From CNBC:
A key driver in their wealth diminishing was, in general, equities, which were down… so too were the valuations—and that makes a substantial part of their net worth,” Mykolas Rambus, CEO of Wealth-X told CNBC on Monday.
In total, the population of China’s ultra-high net worth (UHNW), which are individuals with assets worth $30 million and above, shrank by 2.3 percent in the past year, while their combined wealth decreased nearly 7 percent to $1.6 trillion. That compares to a 3.3 percent gain in the combined wealth of such individuals in the U.S., which saw their net worth hit almost $8.3 trillion this year.
Rambus says individuals holding assets in real estate and manufacturing in China’s coastal provinces were the hardest hit as factory production moved inland.
Concerns over China growth are real, writes The Financial Times’ Josh Noble, even if Beijing isn’t worried about the country’s outlook. Separately, a Sunday editorial in The Financial Times challenges incoming leader Xi Jinping to push on with the rebalancing of China’s economy:
China’s demographics are already turning. One benefit is that wages are rising. But shifting to a new economic model will not be easy. The government’s trick of turning land into revenue is running up against physical and social constraints. If it is to build anything like a viable welfare system it will need to tax its population more effectively. That could set it on a collision course with the middle class it has created.
China’s immediate growth problems are far from insurmountable. The state has low debt and more than $3,000bn in foreign exchange reserves. But the current growth model is unsustainable. Now that he is back, Mr Xi should start thinking about a new one.