This year, the Chinese middle class for the first time outnumbered it. The Chinese middle class now counts 109 million adults, well ahead of the 92 million adults part of the American middle class. Globally, 14 percent of the adult population belonged to the middle class in 2015 – 664 million adults in total.
Wealth Inequality Continues to Widen
Wealth inequality has widened in the aftermath of the financial crisis and this year was no exception. This year's rise in equity prices and in the size of financial assets in high-wealth countries pushed up the wealth of some of the richest countries and people, resulting in increased wealth inequality. The top percentile of wealth holders now own just over half of the world's wealth and the richest decile 87.7 percent.
158 page Credit Suisse 2015 global wealth databook
64 page Credit Suisse 2015 global wealth report
Global millionaires will reach abou 50 million in 2020, up by 46% over today
Global wealth is likely to continue grow at an annual rate of 6.5 percent in the coming years, reaching 345 trillion US dollars in 2020, 38 percent above the current level of wealth. The US will remain the undisputed leader in terms of wealth, holding nearly a third of the global total. The main drivers behind the continued wealth growth are, however, located in the emerging economies. Their share of the global wealth could rise to 19 percent by 2020, from 17 percent today. Both China and India are likely to post annual growth rates above 9 percent in the five coming years. They have together managed to double their share of global wealth to 10.5 percent over the past 15 years. Chinese wealth growth has been particularly strong: In 2000, the size of Chinese wealth was similar to that of the US back in 1939. Fifteen years later, Chinese wealth stood at the level the US had reached in 1972 (33 years later!) and the wealth of the country's households could well continue to leapfrog the growth rates of developed economies. As a result, the number of Chinese dollar millionaires is expected to reach 2.3 million by 2020, a 74 percent increase compared to today. Globally the number of dollar millionaires is set to soar by 46 percent over the next five years, to a total of 49.3 million adults with 22 million of these living in North America, 15.5 million in Europe and 8 million in Asia Pacific (excluding China and India) – an additional 15.5 million dollar millionaires in just 5 years.
In the context of global wealth, USD 10,000–100,000 is the mid-range wealth band. It covers one billion adults. The average wealth holding is close to the global average for all wealth levels and the combined net worth of USD 31 trillion provides the segment with considerable economic clout. India and Africa are under-represented in this tier, whereas China’s share is relatively high. The comparison between China and India is very interesting. India accounts for just 3.4% of those with midrange wealth, and that share has changed very little during the past decade. In contrast, China accounts for 36% of those with wealth between USD 10,000 and USD 100,000, ten times the number of Indians, and double the number of Chinese in 2000.
The middle-class wealth range
For a variety of reasons – including the iconic status of the middle class in North America – the United States is chosen as the benchmark country. Specifically, a middle-class adult in the United States is defined here as having wealth between USD 50,000 and USD 500,000 valued at mid-2015 prices. The lower bound could perhaps be justified by noting that USD 50,000 equates to roughly two years of median earnings and hence provides substantial protection against work interruptions, income shortfalls or emergency expenditures. Similarly, the upper threshold of USD500,000 roughly equates to the amount of capital a person close to retirement age needs to purchase an annuity paying the median wage for the remainder of their life. However, we do not aim to provide a detailed justification of our chosen cut-offs, which are intended to be indicative rather than precise. Other reasonable values for the lower and upper bounds do not appear to change the broad patterns and conclusions.
The net worth of the middle class in 2015 amounted to USD 80.7 trillion worldwide, or 32% of global wealth. Adults with wealth beyond the middle-class threshold accounted for a further USD 150 trillion, bringing the total wealth of the middle class and beyond to USD 231 trillion, or 92% of global wealth
Our results show an expansion this century in the number of middle-class adults from 524 million in 2000 to 664 million in 2015, a rise of 140 million or 27%.
Our projections indicate that over the next five years, Chinese wealth could grow by 9.4% annually in nominal terms, thus leapfrogging another 16 “US years,” approaching the wealth level that the United States first reached in 1988. This projection is based on our assumption of no hard landing for the Chinese economy (a projected real annual GDP growth rate of 6.2%).