China’s millionaire machine slows

China’s millionaire machine has slowed, suggesting that the country’s economic weakness is reaching the top of the economy.

China’s millionaire population grew 3.6 percent last year, adding 100,000 millionaires and bringing its total millionaire count to 2.9 million, according a new report by the Chinese wealth website Hurun. The growth rate marks a sudden slowdown from the double-digit millionaire growth in China in recent years.

By contrast, the U.S. added 640,000 millionaires last year, bringing its total to 9.63 million, according to Spectrem Group. Spectrem defines millionaires as households with investible assets of $1 million or more. 

A man exercises in front of residential buildings along the Shing Mun River in the Sha Tin area of Hong Kong, China.

Jerome Favre | Bloomberg | Getty Images
A man exercises in front of residential buildings along the Shing Mun River in the Sha Tin area of Hong Kong, China.

The number of Chinese worth $16 million or more grew 4 percent to 67,000, according to the report from Hurun and the Industrial Bank. 

Of the 100,000 new millionaires, 30,000 were in Shanghai, 17,000 in Guangdong and 15,000 in Beijing. Beijing still has the most millionaires in China, with 490,000, according to the report.

The report also looked at the health and hobbies of Chinese millionaires. It said the overall “spiritual satisfaction” of Chinese millionaires is relatively high, while the richer millionaires show even higher degrees of satisfaction.

But China’s notorious pollution levels are reaching the penthouses: 87 percent of Chinese millionaires are dissatisfied with pollution levels.

Chinese millionaires spend an average of three hours a week exercising, with jogging, badminton and swimming listed as their top three forms of exercise.

Richest self-made billionaires in Asia

Patrik Stollarz | AFP | Getty Images

They read an average of 10 hours a week, but richer millionaires read 15 hours a week.

“Chinese millionaires are setting aside more time than I expected towards reading and learning, as well as exercise,” said Hurun Report Chairman and Chief Researcher Rupert Hoogewerf.

The top three hobbies of the Chinese rich are fine dining, travel and exercise. Millionaires traveled an average of once a year and spent an average of $10,000.

—By CNBC’s Robert Frank

Luxury yachts, high-end speed boats are the latest toys for China’s young, rich and famous.

Stretch out on the velvet couch, take a sip of wine and gaze upon a tranquil sea, then be invigorated by ocean spray and a cool breeze on deck – that’s not a scene found in movies, but increasingly, it’s the good life being enjoyed by high society in China. And not only in the upper echelons.

According to the 2010-2011 China Yacht Industry Report by the China Cruise and Yacht Industry Association and the China Ship Information Center, there were 99 yacht clubs in the country with up to 1,500 yachts among them. Of these clubs, 26 were still under construction and 45 had completed the planning stage.

“The yacht industry has surfaced silently in China in recent years, gradually unveiling itself and attracting attention from all areas,” said Qian Yongchang, director of China Communications and Transportation Association.

Dianshan Lake in west Shanghai and Taihu Lake in south Jiangsu province have seen a big rise in the number of yacht clubs in recent years, which has buoyed the surrounding property market.

Zhu Ziye joined Shanghai Marina Club in 2010 and charters a yacht about once a month, when he holds parties or gets together with friends.

“It costs about 7,000 yuan ($1,100) an hour to rent the yacht from the club and I don’t have to worry about its maintenance, which is quite expensive, about 10 percent of the value of the yacht,” said Zhu, 43.

He said some of his friends are considering buying their own yachts for about 100,000 yuan.

The 17th China (Shanghai) International Boat Show in April also witnessed the changing fortunes.

The four-day exhibition notched up a total of 2.2 billion yuan of sales, about 120 percent increase from last year, and the most for any exhibition of its kind in China.

Yachts priced between 300,000 yuan and 600,000 yuan ($47,100 and $94,200) were the most popular during this year’s boat show. US-based yacht manufacturer Brunswick sold 13 Harris 220 yachts at 320,000 yuan each, and the Jiangsu Xinsheng Marine company completed 33 deals, with yachts priced between 300,000 and 350,000 yuan.

While owning a yacht may be considered the height of luxury, the emergence of yacht clubs has helped to counter the “aristocratic” image and to rebuild it as a healthy recreational lifestyle.

“Owning a yacht is no longer a luxurious lifestyle as more yachts with reasonable prices become available to middle-class businessmen who want to spend their leisure time sailing out of the city to enjoy the sunshine and fresh air,” said Zhu.

Less affluent visitors are also said to have shown unprecedented enthusiasm for the boat show. About 31,835 attended this year, 40 percent more than 2011, although about half were from overseas.

Gao Haiyan, project manager of Shanghai UBM Sino Expo company, one of the organizers of the boat show, was not surprised by the record high sales or the growing interest in affordable yachts.

“Throughout the 17-year history of the boat show, we have witnessed the maturity of the entire yacht industry. We have also noticed that people’s interest has gradually moved from super luxurious yachts to the moderately priced ones,” said Gao.

“Yachts are no longer luxuries nowadays. With China’s economic advances, it is certain more Chinese will have their own yachts. Reaching the general public is definitely the trend of yacht industry development,” said Yang Xinfa, chairman of the China Boating Industry and Trade Association.

Domestic buyers used to attach more importance to a boat’s size, believing that the larger it was, the more luxurious. “But as the market matures and their tastes modify, it’s become the trend where buyers turn to overseas design firms to complete the style of the yacht in terms of light, color and fittings in accordance with their own aesthetics,” said Yang.

The yacht industry in China has lagged behind that of the West, which has a long history.

“People’s understanding of yachts is still at a preliminary level. However, some rich people in China have come to realize that yachting is a very good recreation and exercise. I am confident that this kind of lifestyle will widely spread in the near future,” he said.

According to the Shenzhen-based industry research firm CI Consulting, the yacht economy sprouts in Western countries when GDP per capita reaches $3,000. At present, there are more than 20 coastal Chinese cities with a GDP per capita above $8,000.

China also has a coastline stretching more than 18,000 kilometers. Together with the 6,500 islands and 24,800 lakes, the country offers huge potential for growth in the water recreation market and development of the yacht industry. It is predicted that yachts will become the next consumption growth indicator after property and automobiles.

Wang Depei, director of Shanghai Forecast think tank, said the real economy will grow into one based on human experience.

“As a combination of real economy and human experience economy, the yacht industry could well indicate future trends in consumption,” said Wang.

Jeff Chuan, a head of Standard Chartered China, said: “The so-called rich second generation in China are transferring their interest from sports cars to yachts. They may grow into private-jet fans in the future. It is an inevitable trend. While they are growing from super fans of sports cars to yachts, it means that their values and appreciation have been promoted.”

Shi Jing reports in Shanghai.

Contact the writer at shijing@chinadaily.