The latest Government Work Report touches upon wealth creation, in line with consumer focus on protection products
When he delivered the Government Work Report on Sunday, Chinese Premier Li Keqiang may have been reflecting the financial aspirations and hopes of the nation's 109-million middle class among other things.[Special coverage]
During his speech to the annual meeting of the National People's Congress, Li highlighted government efforts to help boost people's wealth through productive work, so that they could reach their life goals. The country's personal per capita disposable income grew by 6.3 percent in real terms in 2016, he said.
The reference to "disposable income" seemed timely because, of late, the middle class－people with net assets worth between $50,000 and $500,000 each－have been groping for high-return options that increasingly appear to be few and far between, due to the changing economic growth trend, stricter regulations and fluctuating currency.
Personal finance and wealth management have become hot topics among China's retail investors. He Ziying, 32, a human resources manager at a private construction company in Beijing, is one such retail investor.
She is concerned about her family's financial future although her current situation suggests there is no real cause for worry.
Thanks to their parents' support, He and her husband own a two-bedroom apartment, which they bought outright, without any mortgages. They drive a VW Passat. Married in 2011 and yet to have their first baby, both hold stable jobs that pull in about 200,000 yuan ($29,000) a year.
But He has been uneasy ever since she began thinking of having a baby. Her parents will soon turn 70. "I get anxious as I think about it," He said. "I don't want to leave my family's financial future to chance."
She wants to support her planned child's overseas education and her parents' twilight years, and maintain the quality of her own life post retirement.
To do all that, He needs to protect and grow her family's wealth. She is on the lookout for a sound financial plan. Only, there don't seem to be many around due to shortage of investable assets. This is what makes her anxious in the current low-rate environment.
He wants to invest her family's savings in relatively safe instruments or schemes that could offer satisfying returns. But China's easy monetary policy, which has helped stimulate the economy all right, has also inflicted financial pain on small investors.
Consider new loans. In recent years, they have been growing at around 11 percent annually, higher than the GDP growth rate range of 10.6-6.7 percent (between 2008 and 2016).
Abundant money supply has driven down real interest rates as well as investment yields across all asset classes.
"It used to be easy to find investment products that offer more than 10 percent in returns," He said. "Now, easy profits are no longer available. I'd be happy if my wealth manager offers me something with a rate of return above 4 percent."
Over the past decade, China's GDP grew from 21.9 trillion yuan in 2006 to 74.4 trillion yuan in 2016, a growth record, with this year's GDP forecast to grow at 6.5 percent. The yuan appreciated from 7.8 per dollar at 2006-end to 6.96 at 2016-end. This led to a steady rise in people's income and family wealth.
