– This is the script of CNBC's news report for China's CCTV on November 18, Wednesday.
Welcome to CNBC Business Daily, I'm Qian Chen.
According to the latest Credit Suisse report, The Chinese middle class has grown to outnumber the U.S. middle class for the first time, with 109 million Chinese adults now counted in that category compared with 92 million American adults.
China now accounts for a fifth of the world's population, and holds nearly 10% of global wealth, the bank said in its sixth annual Global Wealth Report. However, some have argued that the report's calculation is somewhat overestimated. Let's do a simple math here -
- As of 1 January 2015, the population of China was estimated to be 1.37 billion
- urbanization rate is at 54.7%
- The total dependency ratio of population in China is 35.9%, including 23.9% of children under the age of 15 and 12% of the elder above 65.
Then, we can conclude that China has 0.25 billion people who work and live in the city area. Taking the unemployment rate into account, it probably means that 50% of whom work in cities will be seen as the middle class, according to the report.
Is it too many?
Well, you have to know that Credit Suisse defines the middle class in terms of a wealth band rather than an income range, in order to be more mobile to a temporary drawback such as a spell of unemployment.
To be a member of the middle class in 2015 according to the report's methodology, an adult needs USD 50,000 to 500,00 in the US, while just needs at least USD 28,000 in China.
Another interesting thing I noticed while reading the report...
If we take a look at the assetsbreakdown, the US is having a very high portion of assets (69%) reported as held in financial form, due to the fact that the US has a larger number of direct shareholders and more economic activity in the private sector relative to the public sector and more outward foreign investment than most other countries. Debts are averaged of USD 58700, at around 16% of the gross asset.
Due to a high personal saving rate, a high proportion (52%) of household assets are in financial form. At the same time, housing and land properties are very important forms in wealth of China, amounting USD 11700 per person in real assets. Moreover, debt averages 8% of gross assets, relatively low but rising quickly in recent years.
It means that average Chinese still tends to save more and put money into properties as wealth assets, while Americans are saving less, more willing to borrow and invest. This is different in terms of composition of wealth per adult between the two nations. However, during the transformation to become a consumer-driven economy, China will have to make sure that its middle class got its back by providing enough domestic demand.
Meanwhile, the report also shows that China's wealth growth is especially impressive when viewed over a longer time frame. In 2000, the country's wealth was similar to that of the U.S. circa 1939, the report found. By 2015, it had expanded to the level of the U.S. in 1972, effectively accomplishing a 33-year leap in less than half the time. Household wealth in China is expected to continue to exceed the growth rate of developed economies, putting it on track to create 2.3 million millionaires by 2020, a 74% increase from today.
CNBC's Qian Chen, reporting from Singapore.
**START UNITED STATES AND FRENCH FORCES LOOKING TO CHOKE ISIS' MAIN SOURCE OF FUNDING - BLACK MARKET OIL.
IN A MORE AGRESSIVE APPROACH, AIRSTRIKES ARE FOR THE FIRST TIME TARGETING THE TRUCKS USED TO TRANSPORT THE OIL. PREVIOUSLY THE FOCUS HAS BEEN ON DISABLING PRODUCTION IN THE OIL FIELDS, WITHOUT COMPLEYELY DESTROYING THE INFRUSTRUCTURE AND AVOIDING CIVILIVAN CASUALTIES.
THE TREASURY DEPARTMENT ESTIMATED EARLIER THIS YEAR THAT ISIS MADE 40 MILLION DOLLARS IN ONE MONTH FROM THE SALE OF OIL. IF YOU DO THE MATH, THAT'S ROUGHLY $500 MILLION DOLLARS A YEAR.
THE GROUP OPERATES OIL FIELDS IN NORTHERN IRAQ, IT'S BELIEVED ROUGHLY 65% OF ITS OIL REVENUES COME FROM THAT AREA. IT IS ALSO BELIEVED THAT IT HAS REFINING OPERATIONS IN SYRIA, WHERE IT TURNS CRUDE INTO PRODUCTS. IT THEN SELLS THAT OIL AND GAS ON THE BLACK MARKET, LIKELY AT A DISCOUNT.
HOW MUCH OIL ARE WE TALKING ABOUT? NOT MUCH, BUT ENOUGH TO FUND ITS OPERATIONS. AT 50 DOLLARS A BARREL, 500 MILLION IN ANNUAL REVENUE EQUATES TO ROUGHLY 27,000 BARRELS A DAY. FOR PERSPECTIVE, CONSIDER THAT IRAQ NOW PRODUCES 4 MILLION BARRELS A DAY.
IN THE WAKE OF FRIDAY'S ATTACKS, YOU CAN EXPECT AN EVEN MORE AGRESSIVE APPROACH IN TARGETING THE FINANCES WHICH ARE FUNDING ISIS' OPERATIONS, SINCE NO CORPORATION CAN OPERATE WITHOUT CASH. BACK TO YOU **END HERE