Business |  Economy

China on path to become world's No. 2 in wealth

By Lydia Chen  |   2011-10-20  |     NEWSPAPER EDITION

The story appears on Page A3
Oct 20, 2011

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CHINA is expected to replace Japan as the world's second-wealthiest country after the United States with total fortune shooting to nearly US$40 trillion by 2016, Credit Suisse AG said in a report yesterday.

However, the accumulation of fortune will be achieved along with an expanding wealth gap in China where the Gini coefficient, a commonly used measure of inequality of wealth, has already passed an extremely dangerous level.

China, which has surpassed Japan as the world's second-biggest economy, will soon also catch up with the neighbor in terms of total wealth.

Overall wealth at the hands of Chinese mainland people is projected to reach US$39 trillion in the next five years, the firm said in its annual Global Wealth Report.

China now has a total wealth of US$20 trillion, third in the world behind only the US and Japan but ahead of France, according to the report, which analyzes the wealth distribution in more than 200 countries.

Total fortune in China increased by US$4 trillion from January 2010 to June this year and is the second-highest contributor of global wealth growth after the US, the report said.

Wealth per adult in China has more than tripled from US$6,000 in 2000 to US$21,000 this year, according to the report.

The report downplayed overall wealth inequality in China, saying it remains moderate with 37 percent of the adult population lying in the middle segment of the wealth pyramid with a fortune of US$10,000 to US$100,000 per adult, while 5.8 percent of the adult population falls below US$1,000 and 2.3 percent above US$100,000 each.

China had a population of nearly 1.34 billion by late last year, according to the country's latest census, with about 70 percent of the population aged between 15 and 59.

With the increasing wealth of successful entrepreneurs, professionals and investors, inequality has been rising strongly, the report cautioned. So far this year, China has gained more than a million millionaires for the first time and now has more than 5,000 ultra-high net worth individuals with average fortunes above US$50 million, behind only the US, the report said.

The Gini coefficient in China reached 0.5 last year after hitting the recognized warning level of 0.4 more than 10 years ago, according to a report by Xinhua news agency in May last year. Developed European nations and Canada tend to have Gini indices between 0.24 and 0.36.

A low Gini coefficient indicates a more equal distribution, with 0 corresponding to complete equality, while higher Gini coefficients indicate more unequal distribution, with 1 corresponding to complete inequality.

China is nowhere to be found in the list of top 10 countries with the highest average wealth per adult. Using that scale, Switzerland, Australia and Norway are the three richest nations in the world, with Switzerland recording average wealth per adult at US$540,010 - the only country to exceed half a million dollars.

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