By Dr. Rainer Zitelmann
In recent years, the number of millionaires and billionaires in China has increased faster than anywhere else on the planet. And millions more people in China harbor dreams of getting rich. I was recently on a tour of five Chinese metropolises, in relation to recent research I’ve completed, which is captured in book, The Wealth Elite. To introduce the findings to Chinese audiences, the academic publisher SSAP arranged speaking events for me in Beijing with 21.5 million residents, Guangzhou with 11.1 million residents, Nanjing with 8 million residents, Shanghai with 23 million residents, and Shenzhen with 12.5 million residents.
Everyone Is Doing Better
Everyone I met believes they are making economic progress—not only personally, but also in terms of their country as a whole. At the event in Shanghai, for example, I asked how many of the audience were doing better than their parents. Absolutely everybody raised a hand. This exemplifies China’s development. According to UN figures, in 1981, 88 percent of the Chinese population was still living in poverty. Today it’s only 2 percent. Hundreds of millions of people have risen from poverty into the middle class. This process all began in the 1980s, when Deng Xiaoping famously proclaimed: “Let somepeople get rich first!” Nowadays, millions of Chinese people are seeking to emulate the initial “some.” In all likelihood, they won’t allget rich, but living conditions will improve for almost everyone, providing China continues on its current path.
In meeting and speaking with these audiences, my impressions were that young Chinese people in particular are full of optimism and ambition, and more broadly, the Chinese are extremely interested in wealth creation, and hungry to learn how to do it. After my presentation in Beijing, a student approached me. He was just ten years old. He spoke good English and wanted to know what I thought was the right age for him to start working alongside school, open up his own business and start building wealth.
While there, I also spoke to Professor Zhang Weiying, one of China’s best-known economists, whose book, The Logic of the Market, I frequently quote in my new book, The Power of Capitalism. I met him in Beijing and we discussed current developments. We both agreed that China’s success in recent decades was not based on a special “third way” between capitalism and socialism. Rather, it was solely due to the fact that the state’s power over the economy has gradually receded in favor of greater market freedom and private ownership rights. Whether this process will continue or be partially reversed remains to be seen. There are different factions in the Chinese party – some members want to focus on further reforms and others want to roll things back.
Shenzhen – From Poor Fishing Village To Vibrant Metropolis
Today, wealth is often viewed with skepticism, both in Europe and by young Americans. In contrast, the young Chinese people I met see wealth as something unreservedly positive. The country’s journalists, who were often very well prepared and had read my books, shared the same sentiment. The editor of CBN Daily had underlined passages throughout my book—and her questions were not about whether it makes sense to get rich at all, but about howto get rich.
Shenzhen is a prime example of China’s incredible development. In socialist times, it was a small fishing town of 30,000 people. Many people fled to neighboring Hong Kong via Shenzhen. Later, the city became one of China’s first “special economic zones.” This was the name given to the experimental zones that are even more capitalistic than Europe or the U.S. Today, Shenzhen is a vibrant metropolis with over 12 million inhabitants. Many are entrepreneurs. Everywhere you look, new startups are emerging, especially in the Internet sector. I was invited to a presentation by a hedge fund manager whose funds invest in Chinese and American equities as well as in private equity in the healthcare sector. All of the fund’s employees speak perfect English – the CEO had studied in London and worked in Nigeria.
I was also positively surprised by the number of women who attended my presentations. At least half of the audiences were female, a far cry from the talks I host on investment and financial topics in Germany. Many of the attendees had already been abroad, studied in Europe or the United States, and had returned because they saw greater opportunities in China.
Nevertheless, there are also downsides: Because so many Chinese have become rich so quickly, many people think that great wealth can be achieved in a short time. Others speculate on the stock market – they have not yet understood the difference between investing and gambling. The hedge fund manager told me that 70 percent of investors on the Chinese stock market are private investors, a far higher rate than in Europe or United States. As you know, the Chinese stock market has been under pressure for some time, not least because of the escalating trade war with the United States. I wonder how Chinese investors will react?
At the same time, many Chinese people recognize that the best way to get rich is to become an entrepreneur. The young people with whom I spoke have a much more positive attitude to entrepreneurship than many Europeans. This may explain the huge interest in my books—in the first three days of the tour alone, The Wealth Eliteand Financal Freedom sold almost 20,000 copies. Some of the attendees bought whole stacks of books and, following the presentations, asked for autographs, dedications and above all, hundreds of photos.
I will definitely be going back to China. And if the opportunity presents itself, I would like to write a book about the young entrepreneurs in China, so thatIcan learn from them.
Rainer Zitelmann holds doctorates in History and Sociology. He is the author of 21 books. His recently published The Wealth Elite, is a study of collective behavioral patterns resulting in the economic success of Ultra High Net Worth Individuals. It is the first book that aims to fill academic research gaps on wealth creation, applying rigorous academic research methodology to behavioral patterns that result in economic success.