China has nearly 1.4 billion people and at least one million of those are extremely wealthy. According to the Chinese Millionaire Wealth Report 2012, compiled by GroupM and the Hurun Report, there are now one million millionaires in the country. These superrich are on average only 39-years-old. They are predominantly based in Eastern China and many own a business.
On top of that they vacation abroad, buy properties abroad and study abroad.
This means buckets full of Chinese money is pouring out of China.
For example, in the US Chinese people are the main beneficiaries of the EB-5 visa scheme, an investment-for-residency programme that hands out green cards as long as the investment can be shown to create at least 10 jobs.
The EB-5 scheme is not the only evidence. The Wealth Report says that 90 percent of the millionaires are considering sending their children abroad for secondary school, with the US being number one followed by the UK and Canada.
Above all else, the report shows that the biggest area of consumption is travel. Those surveyed spend an average of 20 days per year travelling right now. And when they travel they spend. It is hard to forget images that circulated during Chinese New Year back in January, featuring lines of Chinese people queuing to get into Selfridges, whereupon they spent thousands of pounds on Louis Vuitton and the likes.
In short, Chinese people being wealthier and on the move matters.
But even those with less itchy feet are important for the global economy. Internally, real estate accounts for approximately one-fifth of Chinese investment and investment contributes to over 50 percent of China’s GDP growth. The property industry’s economic consequences are not confined to China, since the country is not fully self-sufficient. Materials used in construction are imported from all over the world. Thus as China’s skyscrapers rise, so do non-Chinese profits.
Meanwhile, they fill their mansions with Western goods. Chinese millionaires own around four luxury watches and two-thirds have iPads, amongst many other expensive, imported items.
But this is where the positive stats stop. Millionaire spending habits are slowing with the economy. Last year they spent an average of 1.76 million yuan, a 9 percent decline on the stats for 2010.
Let’s hope this downward trajectory does not continue: A reversal of Chinese fortunes will mean a reversal of others’ fortunes.
