Rising wealth in China and the number of millionaires and the middle class is set to increase through the midpoint of this decade as the country grows more affluent and smarter.
HSBC Holdings Plc’s new report “The rising wealth of China; Millionaires and the middle class lead the way” predicts a world where millionaires in the country are set to double in the next five years, and the middle class will increase by nearly half.
From an asset manager’s point of view, China could be the next hot spot for new clients mainly because the report shows 2 million high-net-worth individuals (HNWIs), those with the equivalent of at least $1.55 million in investable assets, are set to more than double to at least 5 million by 2025.
The bank also estimated the middle-class number (currently at 340 million) would increase by more than 45% to over 500 million in the period.
“The middle class is expanding rapidly too, and the urban homeownership rate is the highest in the world, a remarkable 96%.1 We estimate that total household wealth will grow by more than 50% in the next five years, putting China on a very sound financial footing,” HSBC said.”
For asset managers overseeing their client’s portfolios, the goal is to grow business, and China could be the best region to do so in the period.
“An expanding middle class will underpin medium to long-term economic growth, and stronger consumer spending boosts domestic demand, business confidence, and capital expenditure,” wrote HSBC chief economist Qu Hongbin.
Hongbin said, “A rising middle class will also increase imports of goods and services, and attract foreign companies to invest in China.”
An increasing middle class is the backbone of the country that will help it avoid the “middle-income trap,” and the government will also support a new order to transition the economy to more of a consumption-led one. “It’s not an exaggeration to say that the middle class can be the backbone of China’s dual circulation strategy,” they said.