Enough is enough

Hurun sparks a ‘financial freedom’ debate


How big a wad of this is required?

How much money do you need to be financially independent in China? That’s the question the Shanghai-based Hurun Report tried to answer last month.

The headline figures are these: to achieve base-level ‘financial freedom’ in first-tier cities such as Beijing and Shanghai, you need a nest egg of Rmb19 million ($2.9 million). If you live in a second-tier city, it is Rmb12 million. And in a third-tier city, it is Rmb6 million.

If you want to achieve ‘advanced-level financial freedom’ in Beijing or Shanghai, the pot needs to be Rmb190 million, Hurun said.

The figures were shocking to many ordinary Chinese: the average annual salary after tax in Beijing and Shanghai is about Rmb70,000, meaning it would take more than 260 years to achieve so-called ‘financial independence’.

The main driver of the high figures are house prices, and the expectation that successful people should own their own property.

“In India, for example, young people are not expected to own a house, so entry-level financial freedom is much lower. As long as there is enough money to rent, that’s okay. The entry-level requirement of wealth freedom for Mumbai in India may only cost Rmb9 million, compared to Rmb19 million in Shanghai,” Hurun’s founder Rupert Hoogewerf said in a WeChat interview.

In the same report, Hurun estimates there are over five million families in China with assets of over Rmb6 million, and over two million families with assets of more than Rmb10 million. The report also predicted that Rmb17 trillion of wealth will be passed on to the next generation in the next 10 years and that Rmb42 trillion will be passed on in the next 20 years. The lucky beneficiaries won’t have to work and will have to figure out how to deploy their assets (and social influence).

But definitions of financial independence can differ. For some it might mean not having to get a job, for others it means being free of financial support from parents, the state or bank loans.

Hurun defines it in terms of being able to live safely and comfortably without having to think about the cost of things. A basic-level financially independent family living in Beijing has a 120-square metre apartment, two cars, an after-tax income of Rmb600,000 and Rmb8 million in investments. “Advanced-level financial freedom” in the Chinese capital, however, is defined by Hurun as two luxury homes, four cars and Rmb65 million worth of financial investment.

Hurun’s latest research effort has certainly been successful in stoking discussion. But in the year that China’s ruling Communist Party celebrates the 100th anniversary of its founding, debates about wealth generation can be sensitive. Instead, the country’s leaders prefer to focus on the fact that extreme poverty has been eliminated and insist that China can now be described as a ‘moderately prosperous society’.

So unattainable were the monetary fortunes identified by Hurun that state broadcaster CCTV told people to simply disregard the numbers, accusing Hurun of “fabricating” the ‘financial freedom’ thresholds.

“You don’t need to be kidnapped by figures set by others in your life. If more people can establish a healthy and correct outlook on wealth, stupid tricks like Hurun’s will not arouse much public opinion,” CCTV said.

State news agency Xinhua simply accused Hurun of “selling anxiety”.

“Pursuing a good life is not just about material wealth. Good health, a happy family, a successful career and a fulfilled mind are all worth pursuing,” it added.

Some netizens were clearly riled by the report as well. “Even if I won the lottery I wouldn’t have financial freedom according to this,” exclaimed one. “This is so demoralising,” wrote another.

Others questioned the high thresholds set by the report – pointing out that many Chinese live happy lives on much less.

“This seems too extreme,” said another. “No family needs two cars in Beijing,” he added.

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