New White Paper Sheds Light on Investment Preferences of Chinese Middle Class Households

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A new white paper from a leading financial consultancy in China provides detailed information on the investment and asset allocation preferences of the country’s burgeoning middle-class.

PY Standard (普益标准) and NASDAQ-listed wealth management provider Puyi Inc. (普益集团) jointly released the “2020 Middle-Class Household Asset Allocation White Paper” (2020中国中产家庭资产配置白皮书) on 2 July at a press conference held in the Sichuan province capital of Chengdu.

The study’s survey of middle-class families across a total of 21 provinces and directly administered municipalities around China found that this demographic is currently characterised by “youthfulness, high levels of education, and low levels of fertility.”

Middle-class Chinese surveyed by the study had an average age of 37, with over 40% of them lying within the 26 – 35 year age-cohort.

Over half of middle-class Chinese households have just one child, while only around 20% of them have two children. Younger middle-class Chinese tend to have lower fertility rates, with over half of the cohort aged 26 – 30 still childless.

Nearly half of middle-class Chinese hold bachelor’s degrees, while 32.11% hold master’s degrees or above.

Close to 80% of middle-class Chinese households derive the mainstay of their income from their salaries, with average annual income levels currently at around 560,400 yuan.

The white paper said that the three main challenges confronted by Chinese middle-class households are education for their children, retirement funds and loan repayments, while key problems when it comes to their asset-allocation decisions include:

  1. Lack of mature allocation concepts. Around 7% of middle-class families are unwilling to accept losses on principal, and nearly half of them are concerned about net value asset management products.
  2. Low levels of wealth protection, lack of planning when it comes to long-term expenditures. Less than 30% of middle-class households have a strong understanding of wealth protection and household risk management.
  3. Irrational allocation structure. Residential property comprises a high share of total household assets, at 52.33% on average. Deposits, bank wealth management products and other fixed-income assets comprise a high percentage of financial assets, providing room for further optimisation.
  4. Inadequate retirement fund and healthcare planning. Over half of middle-class households make annual insurance and welfare expenditures that are less than 10% of annual household income.

The white paper also found that Chinese middle-class households prioritise stable-growth when it comes to asset allocation goals, with 37.81% of survey respondents indicating that this was their primary focus.

Middle-class Chinese also have a strong preference for publicly offered mutual funds and availing themselves of the investment expertise of professional institutions. Around 60% of middle-class households surveyed plan to increase their allocations to publicly offered mutual funds within the next year, with stocks, commercial insurance and privately offered funds following closely behind.

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