Foreign Experts Advisory Committee
A cool assessment of China's rise as Asia's second-strongest country in financial assets

In recent years China’s national wealth has grown rapidly. According to the 2012 World Wealth Report issued by German financial services provider Allianz Group, the Chinese mainland’s financial assets hit 6.5 trillion euros, ranking second in Asia, although per capita wealth ranks only 38th in the world. China’s credit is increasing faster than the Asian average. 

Experts indicate that the rapid development of China’s economy has substantially increased national wealth. At the same time we cannot ignore some of the problems thrown up by this high-speed development, problems like credit-based asset growth and unequal distribution of income. Therefore we should maintain a cool head over the fact that China has become the second largest country in Asia in terms of financial assets. 

Middle class on the rise

The World Wealth Report indicates that in 2102 the total assets of individual households throughout the world rose by 8.1 percent, the most dynamic growth in the past 6 years. This has been caused mainly by rising stock markets. Assets in the form of stocks have increased by 10.4 percent, bringing the total value of global assets to 111 trillion euros. 

Asia is the region with the fastest growth in financial asset values. China's performance is outstanding in the region, with total net assets ranking just behind Japan. 

China’s growth is due to rapid economic development over the last decade, which has dramatically increased per capita assets and given rise to a large middle class population. The report shows that the world’s middle class population has increased by 140 million. 

The result of this wealth accumulation in China has been that one section of the population is prospering faster than the rest. But private entrepreneurs create wealth through their wisdom and effort. In addition, real estate development also creates wealth and job opportunities, said Xu Hongcai, a senior economist with the China Center for International Economic Exchange.

Per capita wealth remains relatively low

Although the total wealth of the Chinese mainland ranks second in Asia, its ranking in per capita net assets languishes, and there is a substantial gap with the developed and emerging economies. Statistics indicate that the average wealth of an ordinary Chinese is 4720 euros, significantly below Malaysia at 7180, South Korea at 19180, and Taiwan at 65080 euros. 

China's per capita financial holdings are stretched by its enormous population. Although China’s GDP is growing rapidly, the economic base remains weak. Urbanization has surpassed 50 percent, but future development will still be confronted by numerous challenges and the economy faces an uphill struggle.

The majority of financial assets are concentrated in the hands of a few people. The average financial assets of large numbers of poor people are worth very little. Says Xu Hongcai: “We need to direct our attention to the income distribution problem, make an effort to narrow the income gap, change the distribution mode of production, and improve the distribution of labor value.”

Worries behind asset growth 

Another problem is that the growth of the mainland’s financial wealth relies on unsustainable credit growth. 

In Asia financial assets are growing faster than the world average. However there is a negative aspect to this development—the growth of personal debt has surpassed the growth of assets. Michael Heise, a senior economist with Allianz Group warns that the credit-based asset growth is unsustainable. 

Xu Hongcai notes: “Attention needs to be addressed to unfair income distribution. The government needs to provide sound guidance on secondary and tertiary distribution to achieve common prosperity. At the same time we should address industrial problems like low-end industrial structure, insufficient technological development, and lack of a systematic capacity to innovate.”



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