The number of billionaires in China has doubled in the past two years, according to the latest rich list by Hurun Report magazine, giving China the second-largest number of billionaires in the world.
Liang Wengen, chairman of construction company Sany, topped this year’s list with a fortune worth about $11 billion. He is now one of 271 US dollar billionaires on the list – up from 130 in 2009 – meaning China is now second only to the United States by this measure.
‘Given the rapid increase in China’s economic growth, it’s unsurprising that the numbers of wealthy people should increase rapidly as well,’ says Prof. June Teufel Dreyer, a China specialist at the University of Miami. ‘And since the property market has been so active – many would say overheated – the disproportionate number of the very wealthiest who made their billions in property is also unsurprising.’Enjoying this article? Click here to subscribe for full access. Just $5 a month.
Robert Kapp, president of Robert A. Kapp & Associates, agrees. ‘Real estate is to China what “finance” became for the United States in the run-up to 2008,’ he says. ‘It’s interesting to see that most of these hyper-wealthy individuals appear to have amassed their wealth beyond the direct domination of the state. Though, of course, nothing is more government-dependent than real estate development.’
Why has the real estate sector spawned so many ultra-rich? Minxin Pei, a professor of government at Claremont McKenna College says one factor is the nature of ‘crony capitalism’ in China. ‘To make money in real estate requires two things: access to cheap land and access to cheap money. Both require guanxi (personal networks).’
According to this year’s list, four of the top 10 made their fortunes in property, while a fifth made his in property and investments. The youngest on the list is Ohio State University graduate Yang Huiyan, majority shareholder of Country Garden Holdings, who is aged just 30.
This rapid accumulation of wealth is likely to be viewed with envy, says Teufel Dreyer, ‘although resentment seems to accrue to the class of super-wealthy in the abstract rather than being attached to individuals.’
‘Someone like Yao Ming seems to be perceived as deserving his wealth because of his superior athletic abilities,’ she says. ‘Not so with the princelings, who are seen as having become wealthy – and arrogant – through connections and probably corruption as well.’
Following Liang at number two on this year’s list is Robin Li Yanhong, chairman of search engine Baidu (he is worth close to $9 billion), followed by Yan Bin (close to $8 billion). Yan’s company, Ruoy Chai International Group, has exclusive distribution rights in China for Red Bull.
So, will property magnates continue to dominate such lists? Teufel Dreyer says there’s a good chance that their days are numbered.
‘Assuming that efforts to cut back on land speculation and cool the property market are successful – and infrastructure projects are, as planned, cut back – I would expect fewer property magnates,’ she says. Instead, she expects future lists to have a greater presence of green technology company magnates, such as the heads of Suntech Power, Yinli Green Energy and Trina solar. ‘The home appliance and auto industries are also likely to expand as Chinese brands eclipse traditional but higher cost suppliers in Korea and Japan,’ she says.
But Kapp says that in a sense, such measures are anyway meaningless.
‘What matters is the way in which these people and their wealth-maximizing activities do or do not engage with society,’ he says. ‘Seeing what China's rich – and they are all, after all, nouveau riche – do with their money is infinitely more interesting than knowing whether Wang is richer than Li is richer than Zhou is richer than Zhang.’
More broadly, the list is also a reminder of the fact that China’s rapid economic growth is also leaving many far behind. ‘After a decade of efforts to reduce the gap between rich and poor, that gap has grown greater,’ Teufel Dreyer says. ‘It’s interesting to compare this situation with Karl Marx’s description of a proletariat increasingly exploited by its capitalist masters eventually reaching a bursting point and rebelling.’
‘I don’t doubt that the residents of Zhongnanhai (Communist Party Headquarters) are concerned about this possibility,’ she adds.