China’s ranks of wealthy people have surged above 1.5m, with combined assets of Rmb165tn ($24.2tn) — but growth in their riches is expected to slow this year to a decade-low, according to a new report.
The number of Chinese with investable assets of at least Rmb10m climbed to 1.58m by the end of 2016, up from 180,000 a decade earlier, the report from China Merchants Bank and Bain & Co showed.
Their combined assets are expected to rise to Rmb188tn by the end of this year. That marks a drop in growth to 14 per cent — the slowest for at least a decade which follows a peak between 2014 and 2016, when the compound annual rate hit 21 per cent.
The rate at which Chinese millionaires are created is also expected to decline, with the report expecting 18 per cent growth in 2017, down from a compound annual rate of 23 per cent between 2014 and 2016.
Sweeping reforms to China’s wealth management market this year, as well as a crackdown on high-risk investment products sold by insurers, accounted for part of the deceleration in growth.
“Some of the factors are less investment in bank wealth management products and insurance products, but this could be a short-term trend,” said Liu Xin, a principal at Bain. “There has been much more regulation targeted on bank wealth management products recently.”
Wealth accumulation in China has outpaced the rest of the world for years. Global growth in wealthy people’s assets slowed to 5 per cent in 2015, dragged down by faltering growth of 2 per cent in the US — still by far the world’s largest centre for private wealth, according to a survey from Capgemini Wealth Management.
Last year a report from PwC showed that a billionaire was minted every three days in Asia, with entrepreneurs in China accounting for 80 per cent of new billionaires in the region.
China’s billionaires in recent years have made their mark globally, investing in or buying high-profile assets overseas. But an anti-corruption campaign over the past four years has netted some of China’s biggest tycoons, adding sensitivity to the country’s private wealth market.
Most recently Anbang Insurance chairman Wu Xiaohui, who bought the historic Waldorf Astoria in New York in 2014 for about $2bn, was detained by authorities.
Wang Jing, a senior vice-president at CMB, said it was too early to tell whether Mr Wu’s detention would have a significant impact on the private banking and wealth management market in China, but said it was a sensitive topic for the industry.
China’s economic growth rate is declining, coming down from an era of double-digit increases. Gross domestic product growth hit 6.7 per cent last year but is expected to dip below 6 per cent in the next few years.