The new richest-Chinese list is hot out of the oven! Hurun, a Shanghai-based publishing company, dished out its latest yellow book of 1,000 wealthiest people on Sept.24th. The average worth of these big names are down 8.5 percent from last year, which is a result of profit shrink of 469 people on the list. Among these 469 who are doing not so well, 37 have seen their wallets shrank more than half.
The drop is mostly reflected in industries such as solar energy, clothing and retail, and public companies are those that have taken the biggest hit. Stock market in China would not remember 2012 as its favorite year. The Shanghai Composite Index, one of two stock exchange index of mainland China, drop by 19 percent, from 2626 to 2139 points from last year. Xiaofeng Peng in solar energy field, is on the biggest slide ride of Hurun history. Peng was No.6 with 400 billion RMB ($58 billion) on the 2007 list, but was nowhere to be found on the list this year.
Another big reflection of the list is that people from the manufacturing industry surpassed those from real estate, and became the biggest source of wealth, for the first time since 1999 when the list was first created. Over one fifth on this year’s list are manufacturing tycoons. Leading the industry is Wengen Liang, chairman of Sanyi Company, accumulated 480 billion RMB ($70 billion).
I take this as a good sign, showing that more influential companies in China are on the right track pushing the Chinese economy forward. Real estate is an iffy business with a lot of uncertainty in China, so an economy heavily based on real estate is a recipe for potential disasters. Manufacturing, however, is a solider platform.
With that said, China still has a long way to go. If we break down the GDP growth rate of China, only a small portion of the driving force is the increase in total factor productivity (TFP), which measures the effectiveness of using input, usually technology advance. This means that China adopts good practices else where, not so much innovating good practices on its own. So the rapid growth we have seen is not sustainable and could be vulnerable in the wake of emergencies.
Speaking of rapid growth,of course the whopping GDP growth rate is the biggest evidence, however, that could also be proved by the increase in the cut-off for the club of 50 richest people.