China has moved up a notch to third in having the most ultra-high-net-worth households, according to the Boston Consulting Group’s latest annual global private wealth report. Ultra-high net worth is defined as having more than $100 million in private financial wealth. There were 983 Chinese households that did in 2013, BCG reckons.
China’s ranking in the list of millionaire households remained unchanged at second with 2.4 million, but that is up from 1.5 million in 2012. That year it just edged Japan for second place, but in 2013 pulled clearly ahead, although the Abenomics-driven fall in the value of the yen against the U.S. dollar magnified the effect to some degree.
Private wealth increased faster than it did in 2012 across most regions with the Asia-Pacific region excluding Japan being the fastest-growing region worldwide. Five years ago the region had 50% less private wealth than North America. That gap has since closed by half, thanks to the effects of the 2008 global financial crisis and the continuing rapid growth of the Asia-Pacific region.
The strong rebound in equity prices last year drove an acceleration in the growth of private wealth worldwide, although not in China, where equity markets fell 6.8% in 2012. Instead, BCG says, private-wealth products from the rapidly expanding shadow-banking sector was a prime driver of China’s 49.2% growth in private wealth.
That, and the general slowing of the economy, is likely to moderate the pace of growth of private wealth in China this year, if not by much. As BCG also forecasts, China is likely over the next five years to continue to consolidate its position as the world’s second wealthiest country, and continue to close the gap with the U.S.
Don’t expect all that wealth to remain in China, however. The BCG report notes the increasing volume of offshore assets being deposited in Hong Kong and Singapore. Chinese money is also flowing into U.S. and European real estate, while officials are increasingly sending their families abroad, offering another conduit for wealth, in this case probably not overly clean wealth, to flow out of the country.