Shenzhen city skyline.
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The Chinese city of Shenzhen has recorded the fastest growth in the number of millionaires over the past decade and is poised for another influx in the coming years, according to a recent report.
Shenzhen recorded a 140% growth in the number of millionaires, according to the report by investment migration advisor Henley & Partners and New World Wealth.
The growth is much greater than in other first-tier cities in China, notably Beijing and Shanghai, whose millionaire populations increased by 90% and 84% respectively.
In 2023 alone, Shenzhen saw a 10% growth in the number of millionaires, while Beijing and Shanghai saw a decline of around 5% amid an exodus of high-net-worth individuals out of China.
“Overall, the number of millionaires in China declined by 3% in 2023, so Shenzhen significantly outperformed the country as a whole in 2023,” Andrew Amoils, an analyst at New World Wealth, told CNBC.
Most of this increase in millionaires in Shenzhen is due to new business and organic income growth within the city, while around 30% of the growth is due to influx from cities such as Beijing , Shanghai and Hong Kong, Amoils said.
Shenzhen, also known as China’s Silicon Valley, is expected to continue to see “very strong” growth through 2040, compared with Beijing and Shanghai, which are expected to see moderate growth, Amoils added.
This comes against the backdrop of a Chinese economy that has stalled in recent years, dragged down by a struggling real estate sector.
Shenzhen’s economy grew by 6% in 2023, outpacing the growth of Beijing and Shanghai.
The Chinese city of Hangzhou ranked second in terms of millionaire growth with a rate of 125%, while the Indian cities of Bangalore and Austin in the United States ranked third and fourth, respectively; Guangzhou, China, ranked fifth, Amoils told CNBC.
Shenzhen’s progress
“Over the past three decades, what has made Shenzhen stand out from other Tier 1 cities is its relatively light governance and welcoming attitude towards migrants,” said Erica Tay, director of macro research. at Maybank.
Compared to Shanghai, which draws its economic strength from state-owned enterprises, Shenzhen’s business landscape is dominated by private sector entrepreneurs, she added.
Shenzhen, apart from being a hotspot for startups, is also the base city for global tech giants like Tencent, Huawei and BYD.
“The pro-business and innovation regulatory environment has forged wave after wave of personal fortunes (in Shenzhen),” Tay said.
Shenzhen’s ability to create more millionaires will depend on its ability to maintain an environment conducive to its greatest resource: entrepreneurs.
Erica Tay
Director of Macro Research at Maybank
The metropolis was designated as one of China’s first special economic zones in 1980, which opened the city to foreign investment, technology and market-oriented reforms.
Its proximity to Hong Kong, which is typically business-friendly and efficient, has also helped Shenzhen learn how to grow its economy, said Zhiwei Zhang, chief economist at Pinpoint Asset Management.
“I think Shenzhen is the most promising city in mainland China in terms of economic potential,” he said.
With 50,300 resident millionaires, Shenzhen is currently the 27th richest city in the world, and at its current growth rate, it is expected to be in the Top 10 by 2040.
“In the future, Shenzhen’s ability to create more millionaires will depend on its ability to maintain a conducive environment for its greatest resource: entrepreneurs,” said Maybank’s Tay.
New York tops the list of the world’s richest cities, followed by California’s Bay Area, according to a recent compilation by Henley & Partners. Tokyo and Singapore ranked third and fourth, respectively.
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