Chinese middle class is diversifying their investments with cryptocurrencies.
Less than 10% of China’s new middle class is placing crypto eggs in their wealth management baskets, according to the 2018 White Paper on the New Middle Class. This is the first time that the annual report is including Bitcoin and other cryptocurrencies as an investment option. The paper—published by famed financial writer and university professor Wu Xiaobo and his team—is meant to decipher China’s middle class and their purchasing, investment, career, family, and value profiles.
For Chinese investors, cryptocurrency is the least popular investment option which is not surprising considering that investing in this type of asset is still far from the mainstream and that trading crypto is banned in China. Bank deposit and wealth management products offered by banks ranked first, according to Wu’s team.
Wu’s team suggests the Chinese middle class is mostly risk-averse. Only 9.2% individuals surveyed responded that they accept an investment loss higher than 15%. Considering the fluctuations of bitcoin and other cryptocurrencies as well as bans on ICOs and cryptocurrency trading in China, it seems unlikely that investment in crypto will rise.
Still, there have been discussions in favor of virtual currencies as a potential wealth protection option on the Chinese internet especially after reports on citizens of Venezuela and Turkey buying crypto to hedge political, exchange rate, and inflation risks.
Wu Xiaobo, founder of Blue Lion publishing brand and former EMBA Program Professor of Shanghai Jiaotong University and Jinan University, has been publishing the Paper for the last three years.
The report, which is available to order in a book format was based on a survey of 100,000 individuals and 1 million pieces of data gathered from other sources. Wu’s team set up 8 criteria ranging from income to aesthetic standards to define the “new middle class.” Satisfying at least 6 would qualify someone as a member of the middle class while satisfying 4 or 5 indicates a to-be member of the middle class. The 8 features include an annual RMB 200,000 to 5 million family investment budget and an annual family income of RMB 200,000 to 1 million.