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The fortunes of China’s new business leaders are closely tied to those of its economy, which thrived over the past five years to the end of 2018 as the world’s center of economic activity shifted east. However, a report by UBS and PwC reveals that after years of steady urbanization coupled with consumer spending and hikes in real estate prices, 2018 was the year when China paused for reflection.
Globally, billionaire wealth dropped by $388 billion in 2018. This was due to a strong US dollar, trade fiction, fears of lower economic growth, and financial market volatility. But it was the APAC region that witnessed the sharpest fall in billionaire wealth, with China particularly affected. The headlines from China in the past year have been gloomy. Trade friction with the US has risen, while GDP growth in the world’s second-largest economy slowed to a near three-decade low of 6%. The report indicated that the number of billionaires in the region fell by 60, to 754.
The government was actively seeking to rein in financial leverage in the shadow banking system, tightening financial liquidity to certain industries of the private sector. The MSCI China Index fell by 18.8%, its worst performance since 2011. The currency depreciation in the Chinese Yuan against the US dollar – by around 6% - also contributed to roughly half of the decline, owing to market uncertainty over the potential impact of de-globalization. At the end of 2018, standing tall were 325 Chinese billionaires, down 48 from the earlier year.
Nonetheless, when compared to the past five years, China’s 2018 performance was merely just a bump in the road. Today, China’s pool of entrepreneurs has quickly risen to become the world’s second-largest billionaire group in the same period, surpassing Russia in the process. The nation’s entrepreneurs grew wealth by 202.6% to reach $982.4 billion over the same period.
The total wealth of the 400 members of the China Rich List by Forbes rose by more than a fifth from a year ago, to $1.29 trillion, as China’s consumers spent more on everything and spent more of it online. IPOs were another fuel for fortunes. Alibaba’s co-founder and chairman Jack Ma reigns as China’s richest individual for the second consecutive year. Ma’s fortune rose to $38.2 billion from $34.6 billion a year earlier as New York-listed Alibaba gained on China’s e-commerce boom. Proving that traditional firms can still create billionaires in China, snack maker Three Squirrels’ chairman Zhang Liaoyuan debuted on the list with an estimated net worth $1.6 billion.