As wealth inequalities soar across the world and a trade war rages on between the US and China, a stunning report by Credit Suisse says the number of millionaires in China has, for the first time, surpassed the number of wealthy Americans.
Credit Suisse published the new report in its annual Global Wealth Report on Monday, which is the most "comprehensive and up-to-date source of information on global household wealth. "
The Swiss bank's report found 100 million Chinese were members of the global top 10% club versus 99 million Americans.
"Despite the trade tension between the US and China over the past 12 months, both countries have fared strongly in wealth creation, contributing USD 3.8tn and USD 1.9tn, respectively.
The number of millionaires has also risen globally by 1.1million to 46.8 million in 2019, collectively owning USD 158.3 trillion or 44% of the global total.
China and other emerging markets have contributed significantly to this growing contingent and show signs of progress and opportunity for investors," stated Nannette Hechler-Fayd'herbe, global head of economics and research at Credit Suisse.
A seismic shift is underway, one where the number of wealthy American consumers, who powered the global economy for decades, is starting to fade.
The report offered some insight into the slump of wealthy Americans, as we tend to believe it could be due to demographics issues.
While US population growth hits an 80-year low, unleashing demographic stagnation, leading to a dismal economic recovery, China's population isn't expected to stop growing until 2030, indicating that the Asian economy will continue to be somewhat more robust for the next decade.
It's likely that China's upper-middle-class and wealthy families, currently has more millionaires than the US, will be a crucial driver for global consumption in the 2020s and beyond.
Anthony Shorrocks, a British development economist and author of the report, suggested that after the 2008 financial crisis, China replaced the US as the world's global growth engine of wealth creation, which maybe explains why more millionaires are being produced in the country.
Shorrocks adds that the US has endured more than a decade, since the post-financial crisis, of creating wealth for its adult population.
However, there was little explanation behind the wealth creation in the US and why not enough millionaires were being produced. Perhaps, it could be due to some of the widest wealth inequality in history, where all the wealth gains are flowing to a very limited number of people -- maybe not the case in China, where the wealth is being shared by more, hence, why more millionaires are being produced.
China and the world are entering a new era. The real driver of global growth will likely be upper-middle-class and affluent consumers from China. This new report adds credibility to the trend at play.