China’s Rich and Super-Rich feel the pinch

I won’t be shedding many tears.

Many of China’s richest people grew a bit poorer this year as stock and property markets tumbled, but the country’s wealthy are riding out the downturn better than many of their foreign counterparts, a survey showed on Tuesday.

Real estate heiress Yang Huiyan, 27, saw her estimated fortune shrink to $4.9 billion from $17.5 billion as the market value of her stake in property developer Country Garden Holdings Co plunged, according to the latest annual Hurun Report, which ranked the country’s 1,000 richest people.

That pushed Yang, who ranked as China’s richest person last year, down to number three, said the report, compiled by researcher Rupert Hoogewerf.

Xu Rongmao, owner of Shimao Property Holdings Ltd, sank to number nine from third place last year, with his estimated wealth dwindling to $3.1 billion from $7.5 billion.

China’s benchmark stock index has fallen about 65 percent from its peak last October and property prices in major Chinese cities have eased with a slowing economy.

But Hoogewerf said China’s super-rich were holding up much better than those in the West.

“Chinese are cash-rich relative to certainly Europe and America,” he told Reuters on the sidelines of an event to unveil China’s rich list for 2008. “We still have 101 billionaires, only five fewer than last year.”

This is basically why China won’t be as badly pulverized as many other countries: they save more than they spend and they don’t live eyeball-deep in debt. They’ll feel the pain but in relative terms it won’t be a calamity. The grief of the super-rich will trickle down, just as their wealth did, but it won’t stop the juggernaut, just slow it down for a while.

Via this site, which you should visit regularly.

The Discussion: 17 Comments

Certainly, the super-rich won’t face such a difficult time (even in the US, I don’t get the impression that the super-rich will suddenly have less money than, for example, me).
However, a comment like โ€œChinese are cash-rich relative to certainly Europe and America,… We still have 101 billionaires” seems immensely out of touch in terms of realities on the ground. I’m sure the US has more than 101 billionaires, but that does not necessarily make for a strong economy. Any economic slowdown, which might be water off the backs of billionaires, would have a greater effect on the majority of China’s population, “peasants” living outside cities, whose savings certainly don’t rank in the billions.
I am not an economist by any standard, but based upon my experiences in the US and China, I would characterize it as almost delusional to suggest that China could make it through this economic crisis any easier than any nation. Of course, I could also be wrong, we’ll see.

October 8, 2008 @ 2:11 pm | Comment

Kevin, there’s one factor affecting China that’s unique. They were held down and pushed backward for decades. If you think of this as post-Mao recovery as much as a boom, they could have more pent-up productivity, and they certainly have less debt than, say Iceland, which is suddenly collapsing. Not that they can’t have trouble but they do have mitigating factors.

Locally though, we’ve had 4-5 students drop out of school because their fathers went broke. And lots of factories closed recently in Guangdong.

October 8, 2008 @ 3:02 pm | Comment

I’m hearing as high as 50 percent of the Guandong factories have closed, but that’s hard to believe. Then again, I’d believe just about anything nowadays, when the impossible has become routine.

October 8, 2008 @ 4:31 pm | Comment

No, nowhere near 50%, but profit margins have been shrinking as the yuan gets more expensive, so previously marginal factories just can’t cut the mustard any longer. I might believe 10%, and that’s a LOT of factories in GD.

October 8, 2008 @ 6:13 pm | Comment

Uh, and just where do the Chinese save their money? In some bank completely unconnected with lending money? Or would it be under there mattress, transforming it from wealth to paper?

Cash is king only when cash can buy a lot – hoarding cash outside the banking system is collectively bright, and saving cash inside the banking system opens you up to systemic risk.

There is no place to hide.

October 8, 2008 @ 10:35 pm | Comment

Well, Irish news is reporting riots on the streets of Hong Kong after the Hang Seng fell 8%…at time of writing I haven’t found this story on any other other news sites.

Here’s the link:

http://www.rte.ie/news/2008/1008/hongkong.html

October 9, 2008 @ 12:23 am | Comment

Maybe it’s just me but something about the concept of a billionaire real estate heiress in communist china does not square, sound kosher, give me a warm fuzzy or sit on the stomach well. If I was a chinese peasant and heard of this idea I would be sharpening my pitch fork or other sharp farming implement to make a “run on the bank” so to speak. If I was a chinese peasant I probably would have been shot a long time ago. I wonder if the 27 year old billionaire real estate heiress went to school with the children of Richard Fuld the CEO of Lehman Brothers.

October 9, 2008 @ 4:50 am | Comment

@DMP

The Irish news got the facts all wrong. There was “no riot in the streets of Hong Kong.” Here is what they should have reported:

‘Give me back the money I made’

“Furious investors take their case for a full refund to Legco and the Bank of China

“Close to 1,000 investors in minibonds and other Lehman Brothers products clamoured for a full refund at the Legislative Council and the Bank of China yesterday.

“The crowd spilled from Chater Garden into the Legco car park. Most were retirees. Some cried, others shook their fists in anger. One woman arrived in a wheelchair.”
South China Morning Post

http://www.scmp.com/portal/site/SCMP/menuitem.2af62ecb329d3d7733492d9253a0a0a0/?vgnextoid=1b73f3af00ddc110VgnVCM100000360a0a0aRCRD&ss=Hong+Kong&s=News

October 9, 2008 @ 5:02 pm | Comment

@ Fred

Well there’s a turn-up for the books. RTE get it wrong again,eh? ๐Ÿ™‚

I thought as much: if there were riots on the streets of Hong Kong I imagine the news would be splashed all over the media…

Thanks for the SCMP link.

October 9, 2008 @ 9:48 pm | Comment

Somehow I think the private banks and real estates shouldn’t be privatized or even exist at all. They make nothing useful for the society and are only places where the rich can dump their money and earn from the interests. They have almost no intrinsic value by themselves and are based only upon people’s confidence in them. Could anyone explain to me the real value of these things?

October 10, 2008 @ 12:10 pm | Comment

http://video.google.com/videoplay?docid=7065205277695921912

This guy is spot on. Watch it, really worth of your time.

Zeitgeist Part 2. Addendum.

October 10, 2008 @ 1:00 pm | Comment

http://www.thevenusproject.com/intro_main/essay.htm

This is not tinfoil hat material. Might seems so at first glance, but it’s actually addressing serious topics. Interesting trend.

October 10, 2008 @ 2:05 pm | Comment

An Obsolete Monetary System

The money-based system evolved centuries ago. All of the world’s economic systems – socialism, communism, fascism, and even the vaunted free enterprise system – perpetuate social stratification, elitism, nationalism, and racism, primarily based on economic disparity. As long as a social system uses money or barter, people and nations will seek to maintain the economic competitive edge or, if they cannot do so by means of commerce they will by military intervention. We still utilize these same outmoded methods.

“Many years ago an attempt was made in the U. S. to understand a social and economic system different from our own. A film called “The March of Time” had this to say about Soviet Communism: “We believe that the American free-enterprise system will function better than the collective system. However, we wish you the best of luck on your new and unusual social experiment.” The failure of communism to provide for human needs and to enrich the lives of its citizens is not unlike our own failures. Both failure and success are inherent in the on-going experiment that is social evolution. In all established social systems it is necessary to devise different approaches to improve the workings of the system.”

“The solutions to our problems will not come about through the application of reason or logic. Unfortunately, at present we do not live in a reasonable or logical world. There appears to be no historical record of any established societyโ€™s leader who deliberately and comprehensively redesigned a culture to fit the changing times. While there is no question that political leaders, to a limited extent, modify some modes of behavior, the real factors responsible for social change are brought about by bio-social pressures, which are inherent in all social systems. Change is brought about by natural or economic occurrences that adversely affect the immediate circumstances of large numbers of people.”

October 10, 2008 @ 2:10 pm | Comment

Again, 2 keywords for us to keep in mind: social experiment

Now think about China and its position in the world. Where does it stand, at which exact moment and how.

October 10, 2008 @ 2:12 pm | Comment

There appears to be no historical record of any established societyโ€™s leader who deliberately and comprehensively redesigned a culture to fit the changing times

Really ? I can think about one… Can you ?

October 10, 2008 @ 2:14 pm | Comment

The thing that I don’t understand is why some leaders, like Chavez, which are obviously fighting the US empire, do not actually speak about the underlying issues and the truth underneath.

Maybe we’ll see this soon, who knows. A real call to the people, an honest and straight wake up call.

Changing times…

October 10, 2008 @ 8:22 pm | Comment

We live in a movie… Incredible. The craziest stuff is becoming real…

October 10, 2008 @ 8:27 pm | Comment

RSS feed for comments on this post. TrackBack URL

Leave a comment