Daniel Slotta
Research expert covering Greater China
Private wealth management in China - Statistics & Facts
Private wealth management or private banking generally refers to the certain financial service provided by financial institutions for high-end-worth individuals (HNWI). It can be defined as a kind of comprehensive entrusted investment service in which a commercial bank established an agreement with its client that the bank is authorized to manage and invest with the client’s investable assets according to statements in their agreement.
Due to strict restrictions on foreign banks and the uncertain environment of China’s financial market, the boosting China market has long been the Wild West by the foreign private banks, as an executive at a leading wealth manager in China mentioned. But this situation might be changed thanks to some measures that China’s authorities are taking on market regulation and opening. The large commercial banks in China were required to set up separate wealth management units with own books and accounts to ensure fair competition. In his speech at the Summer Davos Forum 2019, Premier Li Keqiang announced to advance the cancellation of the regulation on foreign shares of securities, futures and life insurance services from 2021 to 2020, which shows China’s ambition to open its financial market to the world’s bankers.
As of 2021, there were already more than 194 million people using online platforms to manage their wealth in China and they trusted professionals to guide their wealth management online. The rapidly growing wealth management industry will be better standardized by new regulations of the government and prospects with lots of opportunities are to be expected with the booming online market.
A growing industry
China’s wealth management industry is the fastest-growing in the world. In the late 1990s, some China’s commercial banks began to provide their clients with professional investment advice and foreign currency wealth management services, which could be regarded as the beginning of China’s private wealth management industry. At the beginning of the wealth investment development in China, the provided products were mainly products with fixed returns such as interbank bonds, central bank bills and monetary funds. With the decreasing rates on the interbank bond market and the growth of the capital market, new operation systems were introduced to the wealth management industry. Different financial products were developed through the cooperation of commercial banks and trust companies to meet needs of different clients.Due to strict restrictions on foreign banks and the uncertain environment of China’s financial market, the boosting China market has long been the Wild West by the foreign private banks, as an executive at a leading wealth manager in China mentioned. But this situation might be changed thanks to some measures that China’s authorities are taking on market regulation and opening. The large commercial banks in China were required to set up separate wealth management units with own books and accounts to ensure fair competition. In his speech at the Summer Davos Forum 2019, Premier Li Keqiang announced to advance the cancellation of the regulation on foreign shares of securities, futures and life insurance services from 2021 to 2020, which shows China’s ambition to open its financial market to the world’s bankers.
Digital disruption
With the development of internet and the growing penetration of smartphones, more and more people are using internet services to help them manage their wealth and investments. Knowledge on private financial management could be acquired through various channels. This also allows people with less investable assets to manage their wealth through third-party platforms.As of 2021, there were already more than 194 million people using online platforms to manage their wealth in China and they trusted professionals to guide their wealth management online. The rapidly growing wealth management industry will be better standardized by new regulations of the government and prospects with lots of opportunities are to be expected with the booming online market.
