HONG KONG -- Growth in the ranks of China's millionaires is projected to lag behind regional peers between 2023 and 2028, and sharply slow from past forecasts for the mainland, according to a UBS report.
Mainland China is expected to have about 6.5 million people with assets worth over $1 million by 2028, up roughly 8% from 6 million at the end of 2023. That would trail only the U.S., which is expected to count 25.4 million millionaires by 2028, according to the report released this past Wednesday.
However, the pace of growth among the Chinese wealthy set pales in comparison to expectations for previous five-year periods and the much higher forecasts for neighbors such as Taiwan and Indonesia.
Those two markets lead the way in Asia, according to the latest projections, as growth rates sink across the region. Taiwan is forecast to see 47% growth in millionaires to 1.16 million by 2028, while Indonesia is on course for 32% growth to over 235,000.
With a falling population and high wealth migration, China's 8% growth rate is the second-lowest across 56 markets covered by UBS, outpacing only Greece. Netherlands and the U.K. are projected to lose millionaires over the coming four years.
Credit Suisse, which published the annual report for over a decade until its merger with UBS, gave far higher projected growth rates to China for preceding five-year periods: 92.7% for 2020 to 2025; 97% for 2021 to 2026; and 112% for 2022 to 2027.
China's millionaires are also forecast to grow at a slower clip than Russia's, despite ongoing Western sanctions due to the Moscow's invasion of Ukraine. Russia is projected see a 21% increase in millionaires by 2028, to over 461,000.
Commodity prices have helped support Russian wealth, said Paul Donovan, chief economist for UBS Global Wealth Management during a call on Wednesday.
"Because sanctions notwithstanding, Russia is still exporting," he said. "It's not being cut off entirely from the global economy."
China-Russia trade reached $240 billion in 2023, up 26% from the year before. China's imports of Russian crude oil jumped to a record level last year, with Chinese state-owned energy groups including PetroChina and Sinopec Group making purchases of Russian oil in recent years.
In China's case, a decline in overall population is a drag on the growth rate, Donovan said, "while economies like the U.S. have a rising population."
"Of course, China has somewhat better rates of wealth growth given its overall stage of economic development, and that will mitigate the demographic feature," he said.
Another reason China's projections have dropped so sharply is active wealth migration. "There is a trend of China wealth spreading out throughout the Asia-Pacific region more broadly," Donovan said.
Singapore has been a beneficiary of the Chinese wealth spillover, while recently the city-state has tightened up on anti-money laundering practices after authorities busted rich individuals of Chinese origin living in the city-state. They were from Fujian province but held passports from other countries, notably Cambodia.
Singapore's millionaires will grow 13% from 2023 to nearly 376,000 by 2028, UBS said. Hong Kong, which is also vying for mainland wealth, is projected to have nearly 738,00 millionaires by 2028, a 17% increase.
Switzerland's ranks will grow by 19% to over 1.25 million, UBS expects. This comes despite UBS Chief Executive Sergio Ermotti recently predicting that Hong Kong would overtake the bank's home market in wealth management in 2027.
