‘Financial Freedom’ in China refers to the thought of being completely financially independent. A financially free individual could buy whatever they pleased without worrying about the cost. But how much must such an individual earn a year?
Today, 31 March 2021, China’s Hurun Research Institute put a price on wealth. They released the ‘Hurun Financial Freedom in China 2021’ report in collaboration with Baifu Zhongxin 百富众鑫. The report is divided into four stages of ‘financial freedom’: entry-level, intermediate, advanced, and international. It is also subdivided into China’s Tier 1, 2, and 3 cities, as the distribution and definition of wealth varies between tiers. The report’s data includes home ownerships, regular housing prices, financial investments, and households’ annual income after tax.
- Entry-level financial independence: 19 million RMB in Tier 1 cities, 12 million RMB in Tier 2 cities, and 6 million RMB in Tier 3 cities.
- Intermediate financial independence: 65 million RMB in Tier 1 cities, 41 million RMB in Tier 2 cities, 15 million RMB in Tier 3 cities.
- High-level financial freedom: 190 million RMB in Tier 1 cities, 120 million RMB in Tier 2 cities, and 69 million RMB in Tier 3 cities.
- International financial freedom: 350 million RMB, which is equivalent to 50 million U.S. dollars.
These levels include additional criteria, for example, for people living in tier 3 cities to reach entry-level financial freedom, they require 6 million RMB (916,000 USD), which could include a 120 square meter house, two cars, 200,000 RMB annual revenue for the whole family, and 2.5 million RMB in financial investments. According to the report, for the first time ever, over 5 million Chinese households achieved this level.
China’s entry-level financial independence requirement is relatively high compared to other countries because of the high demand for homeownership. For example, in India, young peoples’ housing demands are relatively low, so entry-level financial freedom for them is much lower. As long as there is enough money to rent a nice house, the entry-level wealth freedom requirement for Mumbai, India, may only cost 9 million RMB, compared to 19 million RMB in Shanghai.Hurun Report’s Chairman and Chief Research Officer
One netizen commented, “I think the difference between myself and those people who reached financial freedom is that I spend money on shopping festivals to help them achieve financial freedom.”
Many netizens agreed that they shouldn’t have read the report, as it made them realise the huge gap between “the average Joe” and rich people.
The hashtag #19 million RMB is the requirement for Chinese living in Tier 1 cities to achieve financial independence hit over 100 million views on Weibo.