China Asset Management Industry to Grow Says McKinsey

Posted on 06/14/2023

China’s asset management industry will double to US$ 40.4 trillion by 2030 according to researcher McKinsey. McKinsey expects household wealth to rise along with the country’s pension system. McKinsey suggests firms increase diversification and enhance services to outcompete rivals. Chinese citizens’ financial assets are expected to increase at an annualized rate of 9% a year.

The report said: “Given the constant rise of domestic [bank] deposits and the wealth management segment, pension reform and incremental capital inflow of overseas capital, China’s asset management industry will maintain steady and prudent growth.”

China’s population of 1.4 billion people is aging, and the government is trying to manage pensions for those who need assistance. The government has prompted banks and insurers to help offer new products for retirees. Almost US$ 18 billion a year is expected to be spent in the economy due to these new efforts, and asset managers stand to gain if they can successfully fend off competitors. Enterprise annuities and country’s private pension plan together are thought to account for 70% of the total pension market, although data coming out of the country can be murky.

McKinsey clearly expects growth in China’s economy. Numbers currently seem to indicate growth. However, it has come to the attention of SWFI that many factories in China are currently closed down, with workers outside demanding wages that will never be paid. Certain banks are halting credit cards, and the May labor travel holiday left retailers disappointed as many traveled, but few opened their wallets for discretionary spending. These reports are significant but anecdotal. It will remain to be seen whether McKinsey’s expectation of robust growth is correct.

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