In a first, Chinese rich now outnumber American peers

In a first, people in China who rank in the 10% of income earners around the world now outnumber Americans in that select group, highlighting the ongoing tilt in global wealth toward Asia. The U.S. has 99 million of its citizens in the top 10%, while China has leapfrogged ahead with 100 million citizens in the group, according to a new report on global wealth from Credit Suisse.

“Since 2008, emerging economies including China have accounted for two-thirds of the real wealth gain,” the investment bank said in a blog post. “The ‘new world’ is taking over as the engine of global advancement, while the influence of the ‘old world’ is waning.”

China’s rapid economic growth and strong property market have boosted the ranks of its wealthiest citizens, the report noted. Even so, America is still a far richer country than China, with 18.6 million millionaires in the U.S. compared with 4.4 million in China. The median wealth of Americans also stands at about $66,000 per person, compared with $21,000 in China, Credit Suisse found.

But Chinese households are rapidly adding to their wealth due to the country’s continued strong, if slowing, economic growth, which is typically several times greater than developed countries such as the U.S. and those in the European Union. China’s gross domestic product grew at an average annual pace of 9.5% between the late-1970s and 2018, according to the Congressional Research Service. By comparison, U.S. GDP growth has ranged from about 1.6% to 2.9% annually during the past decade.

What qualifies as the richest 10%?

Households need total wealth of at least $109,430 to rank among the top 10% of what Credit Suisse calls “global wealth holders.” To make the top 1%, households need wealth of no less than $936,430.

The number of millionaires within a country depends on three factors: The size of its adult population, average wealth and wealth inequality — and the U.S. scores highly on all three measures, Credit Suisse found. But China is catching up, which is why it now ranks second after the U.S. in the total number of millionaires, pushing Japan into third place.

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Wealth for China’s citizens has been boosted by the country’s strong real estate market. Even with the ongoing trade was between the U.S. and China, the outlook for Chinese households remains good, Credit Suisse said.

“Trade conditions and debt levels are causing concern, but signs for the coming years are otherwise fairly positive,” the report noted.

China isn’t alone in seeing strong growth among its richest citizens. Three countries — China, Italy and the Netherlands —witnessed an increase of 7.3 percentage points in their share of the top 10%, according to the report.

Outlook for U.S. wealth

In the U.S., wealth has continued to increase for 11 straight years, with richer Americans boosted by low interest rates and 2017’s Tax Cuts and Jobs Act, which cut taxes for many corporations and wealthy households. But there are clouds ahead, the Credit Suisse report warned.

“Headwinds have gathered, however, in the form of a lengthening trade war with China, tension in the Middle East, stock-market volatility and concern about mounting government debt,” the report noted.