The wealth of Chinese households far exceeds that of the United States? Experts question comparability

The wealth of Chinese households far exceeds that of the United States? Experts question comparability

Recently, a Chinese institution launched a "Chinese Household Finance Survey Report", which has attracted attention from the outside world. According to the report, the total net assets of Chinese households are 21% higher than that of American households, which is even more controversial.

*What is the significance of the super beauty of the total wealth of Chinese households*

This report was jointly published by Southwestern University of Finance and Economics and the People's Bank of China in mid-May. Recently, the China Household Finance Survey and Research Center of Southwest University of Finance officially launched the "China Household Finance Survey Report. 2012", which supplemented the latest research data on the basis of the previous report. The report puts forward for the first time that based on 2010 data, the total net assets of Chinese households are 21% higher than that of American households. This conclusion has aroused controversy among scholars.

Some people questioned that China's total GDP is less than half of that of the United States, but household wealth is higher than that of the United States. According to the National Bureau of Statistics of China, in 2010, China’s GDP was RMB 397988.3 billion, or approximately US$60483 billion. The US real GDP in 2010 announced by the US Department of Commerce was 13.25 trillion US dollars.

Some scholars also believe that simply investigating the total net assets of Chinese households, no matter how scientific and reasonable the process, will be a meaningless false proposition. Someone on the Internet compares the average annual salary of Chinese working-class workers with the United States at an exchange rate of 1:6.32. The result is that the average annual salary in China is 49,000 yuan, and the average annual salary in the United States is 272,000 yuan.

*Gan Li: Family Wealth Early Warning of Real Estate Bubble*

China's official People's Daily Online and other media recently reported that the person in charge of this report, Professor Gan Li of the Southwest University of Finance and Economics, further explained the report. Gan Li explained that the main purpose of publishing comparative data on household net total assets is to show that real estate accounts for a high proportion of Chinese households, and we must be alert to the emergence of real estate bubbles.

*Liu Zhengshan: Weak correlation with the housing bubble*

In this regard, Beijing-based independent economist Liu Zhengshan believes that it is meaningless to prove changes in the real estate bubble through household net assets.

He told the Voice of America on July 10: “It doesn’t make much practical sense, because if he wants to explain from this perspective that our real estate bubble is very large, there are many more accurate indicators. For example, the housing price-to-income ratio. If the housing price exceeds A family’s annual income is 6 times the income, which means there is a bubble in real estate. Or the rent-sale ratio, which is the ratio of house rent to selling price. These are all measurable and generally recognized by everyone. If you use family assets to compare I don’t think it’s very scientific."

*Cai Jiming: It is reasonable but not necessary*

Professor Cai Jiming, director of the Political Economy Research Office of Tsinghua University, believes that after 2008, the real estate bubble in China has expanded. For families who invest in real estate, their family wealth It is likely to grow exponentially.

Professor Cai Jiming said: "There is a certain truth. Because since 2008, China's real estate prices have risen too fast. For the average family, if a house of 1 million yuan is initially available, it can be doubled in one or two years. It has become 2 million.”

Professor Cai said, if someone owns two or three houses in a city like Beijing, with the soaring property market prices, it is possible to have a total net family asset of 10 million. However, Professor Cai Jiming said that despite this, total household net assets should not be an indicator of the scale of the real estate bubble at all.

In explaining the report, Professor Gan Li of Southwest University of Finance and Economics also said that the announcement of the total net assets of the family is "just for record." He said, after all, we know for the first time that the total assets of Chinese households exceed those of the United States. Gan Li said, this is also a milestone in our development process anyway.

*Netizens: China’s wealth is concentrated in a few people*

Some netizens commented on July 10 that the total assets of Chinese households are likely to show that Chinese household assets are more concentrated in a few people than in the United States. Some netizens said that if the real estate bubble is squeezed out, the total net assets of Chinese households can never be higher than that of the United States.