China’s rich are getting poorer

The Hurun Rich List, which tracks China’s wealthiest people was released this week, highlighting that “many of China’s richest people have grown poorer over the past year.

The number of billionaires (in US dollars) has fallen for the first time in seven years. There are now 251 people in China worth US$ 1 billion or more, compared to 271 last year. That’s not a massive change, but it’s the direction that’s important. And the drop in wealth was widespread. The report also indicated that: “Nearly half of the 1,000 richest people in China saw their wealth shrink in the past year.”

For the first time since the list was launched in 1999, property lost its position as the sector that generated the most wealth. What took its place? Manufacturing. It’s easy to see why property lost pole position. After all, the Chinese government has cracked down on lending in the sector. Property prices have fallen hard in many areas, and the government seems to be keen for the correction to continue.

However, the fact that manufacturing took its place doesn’t bode well for China’s hopes for ‘rebalancing’ its economy. I suspect this is mainly because the property sector has so far fallen harder than manufacturing, but it’s only a matter of time.

Meanwhile, the most recent data showed that the manufacturing sector shrunk for the 11th month in a row in September, according to HSBC’s manufacturing index. So it seems unlikely that manufacturing – squeezed between pressure from workers for higher wages, and weak demand from global consumers – will be up to producing lots more Chinese billionaires in the near future.

Customer buying luxury watch in China (photo Bloomberg)