China saw its social net wealth reach CNY437 trillion (US$63.48 trillion) by the end of 2016, placing second to the United States, according to the latest report from the Chinese Academy of Social Sciences. A vital measure of overall national strength, China logged CNY13 trillion in external net assets and CNY427 trillion in domestic non-financial assets. This total is equivalent to 70.7 percent of the United States' level during the same period.
Net wealth is often mistaken for net worth in that they both reflect the assets of a country minus liabilities. However, net wealth's coverage also encompasses future assets that may be used for consumption, such as pension benefits and human capital. It is also a reflection of an economy's balance sheet.
Of China's 2016 total, 73 percent is owned by its citizens while the rest of 27 percent is government held. This allowed the state to place ample safeguards to protect itself against financial risks. During the same year, the country's gross domestic product also reached CNY74.4 trillion, which is about 57.2 percent of the United States' GDP.
In the same report, it was also revealed that non-financial assets have been seeing a steady increase since the year 2000, rising 10.3 times to CNY424.5 trillion, while financial assets grew 13.8 times by CNY786.2 trillion. The industries that recorded the largest movements are insurance (up 26.7 percent), securities investment funds (up 44.2 percent), and undiscounted bank acceptance bills (up 25.2 percent).
Zhang Xiaojing, deputy director-general of the National Institution for Finance and Development of the CASS, said in a report by China Daily that the growths indicate the rapid development of the country's non-bank financial system, particularly in the insurance and fund management sectors, which residents now see as a viable means to accumulate and grow their personal wealth.
Meanwhile, the report also cautioned against feeling too confident because of the increases in social net wealth, noting that this is not a guarantee that the country is fully immune to debt risks. It pointed out that there are other factors that can affect the government's net wealth, such as asset liquidity, hidden liabilities, and the cyclical nature and asset prices. It added talking about debt risks alone from the point of view of liabilities is a biased way of studying the situation.
