Since the end of 2006, Chinese share prices have more than
doubled. The market value of these shares accounted for less than
50 percent of the gross domestic products (GDP) in 2005 but
currently it has surpassed the entire GDP. Meanwhile,
shareholders have increased by tens of millions, with economic and
financial issues popular topics among the general public. Financial
terms, such as liquidity and CPI, have become familiar to ordinary
people. The byproducts of wealth are noticeable almost everywhere
throughout society.
On October 20, 2007, Alibaba.com, a mainland
business-to-business (B2B) dealer, issued IPOs on the Hong Kong
Exchanges and Clearing Limited (HKEx) exchange. Share buyers showed
great enthusiasm for this new stock and swarmed into the Hong Kong
bourse, jamming the trade systems of several online banks,
securities firms and HKEx. That day, Alibaba.com raised
approximately US$1.7 billion, second to the US$1.9 billion that
Google raised in 2003. Thus the company, which had been a small
venture with as few as 18 staff members 8 years before, became
overnight one of the world's top 6 Internet enterprises. Due to the
IPO issuing, some 1,000 out of the 4,900 employees who held the
company's shares suddenly owned over HK$1 million each based on the
market value of Alibaba's share. China's largest bunch of wealthy
men appeared, a financial journalist commented afterwards.
Incredibly enough, some children have also benefited from the
bullish stock market. The Bank of Beijing's IPO issuing in
September 2007 made Zhen Yuxuan, a 10-year old, a millionaire.
Besides this child, the Bank of Beijing has another 83 juvenile
shareholders who have become rich from the bank's listing.
The rich in China are quickly getting richer. In 2007, 66
Chinese billionaires entered Forbes magazine's "China rich
list", a huge surge from the 15 listed in 2006. According to Rupert
Hoogewerf, well-known for his annual Hurun Rich List, the 800 rich
Chinese on 2007 Hurun Rich List had average wealth worth US$562
million, up more than one-fold from the 2006 figure. There were 106
billionaires on the list in 2007, an enormous increase from the
mere 14 in 2006. Currently, China, following the US, ranks second
in the world in terms of the number of billionaires. But when
China's first rich list was introduced in 1999, there was only one
billionaire – Rong Yiren.
Mr. Hoogewerf said that the stories about how the newcomers to
the rich list earned multi-billion dollar assets reflects the
amazing scale and variation of commercial opportunities in China.
He believed that the stories of those acquiring great wealth and
considerable achievement are actually the stories of modern China.
He viewed 2007 as the transition year for civilian wealth
accumulation because this year has seen a larger number of
private-owned enterprises, appearing as mature entities after
decades of growth, swarming into the capital market.
The wealth accumulation has made the growth of consumption
slower than that of investment and exports. But China, to the
multi-national companies in various fields ranging from auto-making
and IT to fast food, is the most promising business land because
these companies can find incredibly large and rapidly growing
markets. IT and automobile businesses are excellent examples. In
2003, Chinese IT business accounted for 30.8 percent of the entire
IT market of the Asia-Pacific region (excluding Japan), but this
percentage is expected to increase to 38 percent in 2008. This
growth rate is much higher than the world's average level. The
vehicle population in China is expected to hit 8.5 million in 2007,
increasing 30 percent from that last year.
Rich Chinese have made the cosmetic business, a formerly
unpromising trade, experience an unprecedented boom. In 2007, the
cosmetic market on the Chinese mainland ranked second in Asia and
eighth in the world. A 2007 survey on the Chinese consumption
market predicted that China would become the biggest and fastest
growing luxury market in Asia within the next five years. Cosmetic
sales are expected to reach 80 billion yuan by 2010.
On December 10 2007, the Morgan Stanley Asia Chairman commented
that the Chinese economy had never grown so well and fast as it did
in the last five years. During the last three decades, the Chinese
economy was growing annually at an amazing rate, 9.5 percent. In
2003, China took the place of the US as the most popular foreign
direct investment destination in the world. Now China dominates not
only the labor-intensive manufacturing industries but also the
consumer electronic product manufacturing industries. In addition,
the country has made great breakthroughs in the manufacturing of
computer chips, automobiles and plane engines, among many other
items.
According to an economist, Chinese exports made up 38 percent of
the GDP as of 2005. In the US and India, exports only accounted for
10 percent and 21 percent of the GDP respectively. Moreover, the
investment in China accounted for 45 percent of the GDP as of 2006,
the biggest percentage that has ever appeared in an economy in the
world's history. Therefore, it is reasonable to say that China has
become the primary engine of the global economy and will also
become the largest trading country in the world.
China's booming economy can help offset the negative impacts of
the US's falling demands and add potential momentum to the global
economy. "Reducing the external imbalance may become an important
contribution from China to world growth, if a sharper than expected
US slowdown were to affect this adversely," says Bert Hofman, lead
economist for China at the World Bank.
(China.org.cn by Pang Li, January 2, 2008)?
