Millionaire households leave much to think

(China Daily)
Updated: 2007-11-01 14:21

China's robust growth over the past three decades must have, understandably, hugely enriched its people, especially some of them.

However, the finding that China now has the world's fifth largest number of households with more than US$1 million in liquid assets still gives Chinese policymakers a lot of food for thought. Because the rapid rise in the number of rich families reflects not only the country's growing economic might but also its widening wealth gap.

A report by the Boston Consulting Group (BCG) said that the number of such rich Chinese households has jumped from 124,000 in 2001 to 310,000 last year. These households, which only account for 0.1 percent of the total number of households in China, possess 41.4 percent of the country's total wealth.

Given that China ranks as the world's fourth largest economy and is set to see the fifth year of double-digit growth this year, it is not so surprising that the country trailed only the United States, Japan, Britain and Germany in the number of millionaire households.

Yet, concentration of so much of the country's wealth in such a tiny proportion of households bodes ill for the country's efforts either to change the growth pattern by boosting domestic consumption or building an overall well-off and harmonious society.

The report from BCG showed that 9.6 million high-net-worth households worldwide, or 0.7 percent of the world's total households, have US$33.2 trillion in liquid assets which constitutes about one-third of the world's total financial assets.

Clearly, the concentration level of household wealth in China has become much higher than the world average. This is too much for a country that remains largely a developing economy.

The policy implication of this upsetting finding is certainly not to reduce wealthy households' chances to get richer. Instead, it underscores the urgency for policymakers to tilt the country's economic growth in favor of the overwhelming majority of low- and middle-income families.

Even excessive consumption of the 0.1-percent rich households cannot reduce China's reliance on investment and export for growth. Only common prosperity for the majority of Chinese households can render consumption a desired growth engine for the country.


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