The current situation of wealth accumulation and inheritance of China's wealthy
1. The rapid accumulation of wealth among China's wealthy
In recent years, China's economy has continued to grow, and private wealth has accumulated rapidly. According to the latest report from the Hurun Research Institute, by the beginning of 2023, the number of "wealthy families" with a total wealth of 6 million yuan in China reached 5.14 million; The number of "high-net-worth families" with a total wealth of 10 million yuan reached 2.08 million; The number of "ultra-high-net-worth families" with a total wealth of 100 million yuan reached 133,000.
The total wealth of these wealthy families is as high as 158 trillion yuan, which is 1.3 times the GDP of that year. The total wealth of "ultra-high-net-worth families" with a wealth of more than 100 million yuan is as high as 89 trillion yuan, accounting for 56% of the total wealth. It can be seen that China's private wealth is highly concentrated in the hands of a few super-rich.
The rapid accumulation of wealth among China's wealthy is mainly due to two major factors: first, the development of enterprises and the improvement of the capital market. According to the report, business owners account for up to 52% of "high-net-worth families", and their business assets account for 61% of total assets. In recent years, the domestic capital market has been improving as a whole, with the Shanghai Composite Index, the Shenzhen Component Index and the ChiNext Index rising, which has promoted the rapid growth of business owners' wealth.
Second, the real estate market is improving, especially the luxury housing market. The report pointed out that although the overall real estate market has slowed down due to the policy of "housing for living, not speculation", the luxury housing market is still hot, and the transaction volume of luxury homes with a unit price of more than 150,000 yuan has doubled. This has directly contributed to the rapid growth of the wealth of the wealthy.
Corporate development, capital markets and the luxury housing market have provided an important impetus for the rapid accumulation of wealth for China's wealthy. The high concentration of wealth among the rich in a small number of super-rich reflects the serious inequality in the distribution of wealth in Chinese society.
Second, the wealth of the rich is highly concentrated in first-tier cities
Not only is the wealth of China's wealthy highly concentrated in the hands of a handful of super-rich, but there is also extreme inequality in its geographical distribution. According to the report, China's wealthy families are highly concentrated in first-tier cities such as Beijing, Shanghai, Guangzhou, and Shenzhen.
Specifically, the top 30 cities with the highest concentration of wealthy families in China account for 68% of the total number of wealthy families in the country. On the mainland, Beijing has the largest number of wealthy households with 744,000, followed by Guangdong with 721,000 and Shanghai with 639,000.
This extremely unequal geographical distribution is closely related to the uneven pattern of China's economic development. First-tier cities have concentrated a large number of high-quality resources and development opportunities, and have become hot spots for the rich to accumulate wealth. However, due to the relatively backward development of inland areas, the wealth accumulation of the rich is weak.
In recent years, the number of wealthy households in underdeveloped inland areas has also maintained a relatively high growth, such as Anhui, Gansu, Hunan and other places with a growth rate of more than 30%. This shows that as China's economy continues to radiate to inland areas, the geographical distribution of wealth of the rich may tend to be balanced.
3. The wealth inheritance of the wealthy faces many challenges
China's wealthy are accumulating wealth at a rapid pace, but how to effectively pass it on and ensure that family wealth is passed on from generation to generation is a major challenge. The report predicts that in the next 10 years, 21 trillion yuan of wealth will be passed on to the next generation, 49 trillion yuan will be passed on in 20 years, and 84 trillion yuan will be passed on in 30 years. It can be seen that the issue of wealth inheritance has become imminent.
The wealth inheritance of the rich faces many risks and practical difficulties. The first is the risk of intergenerational inheritance of family enterprises, the risk of cultivating wealth heirs, and the risk of marital wealth inheritance disputes. Second, the current legal system on the mainland does not adequately protect the inheritance of wealth, such as the inheritance of rural land use rights and management rights, and the limited coverage of property rights protection.
Third, disputes frequently occur in the process of wealth inheritance, such as intestate causing heirs to compete for inheritance, and there is a will but the validity of the will is doubtful. Fourth, the tax policy of wealth inheritance is not clear, which brings trouble to inheritance planning. Fifth, the assets of family enterprises are highly correlated with family wealth, and it is difficult to inherit them.
It can be seen that the wealth inheritance of the wealthy is facing many difficulties, and it is necessary to establish a sound legal system and professional wealth management services to protect it. Industry insiders believe that family trust is the best way to inherit wealth at present, which can realize multiple functions such as family property security protection, wealth management method inheritance, asset information confidentiality and family company manipulation.
In recent years, China's wealthy have accumulated wealth rapidly, but there are also problems of high concentration and geographical inequality. How to properly inherit wealth and avoid "being rich for no more than three generations" will be a major challenge for the wealthy class. Relevant departments shall establish a sound legal system, cultivate professional wealth management services, help the wealth of the rich pass on from generation to generation, and promote the rational distribution and flow of social wealth.