China’s millionaire boom slows to a crawl
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China’s millionaire boom slows to a crawl

In the past two years or so the word “slowdown” has become the term most commonly attached to the Chinese economy, and for good reason. Growth has slowed, credit growth has slowed, housing prices have slowed, and, according to new research, even the rapid expansion of millionaires has taken a blow.

The 2014 version of a study published by Hurun Report and GroupM Knowledge, a media investment organization, highlights two elements. First, the good news. As of 2013, China was still producing more fat cats.

“The number of millionaires is now 1.05 million,” reads the study, while the super rich, whose assets are over 100 million Yuan ($16 million), now number 64,500. It is testimony to the success of the opening up process. In less than four decades, China has grown from an extremely poor country to being the second largest economy in the world. The number of poor people has been slashed, a middle class has been born, and the country’s shares of international trade and GDP multiplied. Cities whose airports were airstrips have been equipped with state-of-the-art infrastructures and subways are growing almost by the month.

Your average Chinese millionaire, says the report, is 38 years old, “with more than half aged between 31 and 45.” Most – 70 percent – are male, with 43 percent holding Masters degrees or EMBAs. Researchers went even deeper, finding that millionaires on average own three cars and four watches, they leave China 2.8 times a year and are away from home on business for 7.5 days per month. They apparently like “travelling, reading, and drinking good teas; their favourite forms of exercise are swimming and golf.” They are healthy, too: “more than 70 percent have regular health-checks, and 10 percent have a personal physician.” The report also states that “70 percent drink alcohol, including 50 percent who are connoisseurs of red wine.” We’re not sure why they don’t like white wine.

But there is another side to the miracle story of Chinese nouveau riche. In 2013, the growth of their ranks slowed, and quite drastically so. The number of millionaires grew by 3 percent, but this, says the report, “represents the slowest rate of growth in their number for the past five years.” Growth has slowed also for the ultra-rich, whose number increased by 2 percent, roughly one third of the previous year’s 6 percent.

The slowdown among the richest strata of society is a reflection of a larger, country-wide process of cooling down. After bouncing back in the aftermath of the financial crisis, growth has steadily and substantially declined from 10.4 percent in 2010 to 7.8 percent in 2013.

Luxury companies are already feeling the heat. According to data cited by the Global Times, a State newspaper, “the sales of watches, which makes up more than one fifth of the total domestic luxury goods market, declined by 11 percent in 2013.” The reason probably lies both in the slowdown and in the anti-corruption campaign launched by the current government.

Confidence, quite naturally, mirrors the mixed economic trend. The report argues that despite a renewed optimism that has accompanied the rise of the administration led by Xi Jinping, the picture combines “elements of both optimism and anxiety.” While most millionaires are either confident – 66 percent – or even very confident – 25 percent – in the economic fortunes to come, the number of those who are worried about the future has grown to 9 percent, from 7 percent in 2012 and 3 percent in 2011, tripling in the space of a couple of years. Similarly, the number of those who are very confident has halved from the 54 percent of 2011, a sign that millionaires are aware that something is not quite as before.