Wednesday, November 7, 2007

Chinese Billionaires

Last year, there were 15. This year there are over 100. It's astounding, mind-boggling, jaw-dropping, and staggering. Of course, it could all come crashing down (as, if fairness, could any newly-minted billionaire coming off their IPO in the western world).

PetroChina is now bigger than Exxon Mobile. Alibaba raised almost as much as Google in it's IPO. The Industrial and Commercial Bank of China is now the largest bank by market cap. Supposedly (can't find the link) 5 of the 10 largest companies in the world by market cap are Chinese.

Certainly the composition of the Chinese market must be different than the US. China's economy is about 10.2 trillion USD (2006) if you look at purchasing power parity, and 2.2 trillion (2007) at exchange rates, while the US is north of 13 trillion. I suspect the US has many more companies that are very large, but not the giant state-run behemoths of China (both PetroChina, and ChinaMobile, for example, were government run and still partially government owned).

I've been thinking the amount of inequality must be much higher in China than in the US, given how a college grad here subsists on something like 1500-3000 RMB per month, and yet there are $100,000 (including import tax) BMWs plying the roads, but this study, cited by Yglesias, says I'm wrong.

I thought this must be bunk in view of what I see every day, and I thought the number of billionaires must surely be evidence of this, but I don't think so.
China's per capita (PPP) GDP of $7800 in 2006 is about 5.5 times less than the US total of $43,500. Given that China has about five times the population of the US, I'm tempted to think that those two factors should balance out, and the number of billionaires be about the same if inequality is also relatively the same, but China only has 1/4 as many. I suspect the fact that this study found inequality to be about the same in both countries has to do with the vast difference in wealth between the middle class (who are still poor relative to Westerners), and the peasants, who are dirt-poor. Of course, it's not that simple, and it all depends on how exactly the national wealth is distributed, and I really don't know all that much about it.

Interesting though. . .

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