HSBC: Chinese Economic Prosperity Appears Strong

Chinese wealth will continue to grow, spurred by the strong presence of high-net-worth individuals (HNWI) and the country’s mass affluent, according to Trista Sun, HSBC’s Head of Wealth and Personal Banking for China.

Household wealth has driven the nation’s economy in recent years, inspiring strong consumer spending, business confidence, and capital investment, Sun writes in Nikkei Asia. The prosperity is expected to continue through 2027, growing around 8.5% a year. By 2025, investable household assets, she says, will reach 300 trillion yuan, or $41.7 trillion.

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HNWI, those who have at least 10 million yuan in investable assets, are a powerful group. Their investable assets total about 70 trillion yuan and may rise to 111 trillion by 2025, according to HSBC, as new millionaires and billionaires join the ranks.

The mass affluent are defined as those with at least 200,000 yuan of disposable income. Now, 340 million such households exist, and Sun reports the number will increase to 500 million by 2025. Members of this economic group tend to be only children born between 1980 and 1995, at the beginning of China’s population-reducing one-child policy. As their families age, couples face the burden of caring for their parents without sibling support.

Also, Sun says, a wealth transfer between baby boomers and their millennial children is now occurring. Chinese families will pass on 18 trillion yuan of assets over the next decade, but will have to navigate family politics and economic and market volatility.

With these concerns, affluent Chinese have concentrated recently on keeping their investments secure, shifting from a growth focus to a more balanced approach. They are putting more of their portfolios into financial assets rather than real estate, for instance, and they are using lifecycle investment planning more than they had previously.

“In the process, they are becoming more adept at balancing the risks of volatility with the opportunities presented by the evolving state of the wealth management industry and the global digital revolution,” Sun says.

HSBC estimates that China's overall household wealth may exceed 900 trillion yuan by 2025, a third of which is expected to be put into investments.