Economy slowing, wealth becoming more concentrated in China

Wealth is concentrating at an accelerating level in China, even as growth of the country’s economy slows.

On Tuesday, 19 December, the World Bank cut its growth outlook for China for 2022 and 2023, citing the impact of "the abrupt loosening of strict COVID-19 containment measures and persistent property sector weakness," according to Reuters. The World Bank forecast China's growth at 2.7 percent for 2022, down from its previous prediction of 2.8 percent in September 2022; and 4.3 percent for 2023, down from its September prediction of 4.5 percent growth.

"China's growth outlook is subject to significant risks, stemming from the uncertain trajectory of the pandemic, of how policies evolve in response to the COVID-19 situation, and the behavioral responses of households and businesses," the bank said. "Persistent stress in the real estate sector could have wider macroeconomic and financial spillovers."

New research has shown that despite a pledge by Chinese President Xi Jinping to reduce income inequality, more of China's wealth is increasingly held by a small elite living in just five locations in the country.

As of 2021, China had five million “affluent” families, designated as those with net wealth of at least CNY 6 million (USD 838,000, EUR 780,000) and 2.06 million “high net-wealth” families worth more than CNY 10 million (USD 1.4 million, EUR 1.3 million), according to a report from the Hurun Research Institute, a consultancy focused on studying China’s wealthy, and Citic Prudential, a China-based insurance and wealth management firm. Some 130,000 Chinese families have net wealth of at least CNY 100 million (USD 14 million, EUR 13 million), according to the report.

More than half of those “high net-wealth” families live in Guangdong, Beijing, Hong Kong, Shanghai, and the adjacent Zhejiang province, which happen to be key sales territories for imported seafood.

The report reveals signs the country’s wealthy are getting wealthier. The number of “high net-wealth” families grew 1.9 percent, with their aggregate wealth growing 27 percent to CNY 160 billion (USD 22.4 billion, EUR 20.8 billion), while the number of “affluent” families remained flat from the 2020 report.

Wealth inequality remains a feature of modern China, according to data collected by Mo Zhexun, a researcher at the Paris School of Economics affiliated with economist Thomas Piketty. The top 10 percent of Chinese families in income terms now control 70 percent of the nation’s wealth, while the bottom 50 percentile control only six percent of national wealth, according to Mo. The top 0.001 percent of the country’s richest people in China control 10 percent of the country’s wealth.   

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