"Mainland Chinese dollar billionaires are a new phenomenon. Today, there are just over 300; in 2000, there was only one," wrote Gordon Orr, a Senior Advisor to McKinsey China, in 2015. For the first three months that year, China produced new billionaires almost every week, according to a UBS and PricewaterhouseCoopers report.

Since then, China's billionaire boom has picked up even more speed compared to the rest of the world.

This year's Forbes list of billionaires included 195 newcomers. Seventy-six of these newly-minted members hail from China, more than from any other country. That's almost 40% of new billionaires. China was also home to the most newcomers in the 2016 and 2015 lists. 

The Chinese Dream: Conditions Apply

Most people are used to thinking of America as the land of opportunity, and communist China as the opposite, but China's new billionaires are slowly crafting a new narrative. Alibaba's (BABA) Jack Ma is a former school teacher and the son of musicians. Wang Wei, China's fifth richest man according to the 2017 ranking, is the son of university professors. As Alibaba thrived, so did Wei's package delivery business. China's eighth richest man, Baidu (BIDU) co-founder Robin Li, was born to factory workers and attended graduate school at the State University of New York at Buffalo.

Nine of this year's 25 female newcomers hailed from China, including Alibaba Group co-founder Lucy Peng. "While self-made female billionaires are rare everywhere, China has the highest ratio of self-made female billionaires, even higher than in the United States," said Caroline Freund, a senior fellow at the Peterson Institute for International Economics. "I think this may be because growing a company in China is relatively less dependent on access to finance, where women tend to have more difficulties. Companies can grow rapidly in China through retained earnings."

Freund says that Chinese billionaires tend to be company founders and younger than advanced economy billionaires. Billionaires with inherited wealth are observed less often in China than in advanced economies and wealth derived from natural resources is less common than in other emerging markets, she added.

"Asian billionaires are generally younger than billionaires elsewhere, having an average age of 57, which is 10 years junior to U.S. and European billionaires. In addition, a significant proportion grew up in poverty (25%), compared to 8% in the U.S. and 6% in Europe. As a result of these factors...Asia [will] be the center of new billionaire wealth creation going forward," according to an UBS AG and PwC 2015 Billionaires Report.

But it isn't all sunny entrepreneurship and work ethic.

Sociologist Salvatore Babones, who studies China's economy, argues that while most of China's billionaires tend to be genuine business people, they also have government connections of some kind, especially in the real estate sector. He provided the example of Wang Jianlin, Asia's richest man, who made his money in real estate after securing a loan with the help of an army friend before going on to expand his empire. "China is a government-oriented economy. No one can say he or she can run a business entirely without government connections. Anybody who says that he or she can do things alone with any connection with the government in China is a hypocrite," Jianlin reportedly said to the World Economic Forum in Dalian in 2013.

Sowing the Seeds

An Investopedia analysis of the newcomer list from last year (Forbes hasn't released a complete list of newcomers in 2017) revealed that the majority of new entrants counted manufacturing or tech as their source of income. Nine made their money in China's real estate market. 

The rapid growth of China's economy this last decade is one of the main reasons we are witnessing the rise of so many new superstar firms and billionaire owners. In manufacturing specifically, China went from seventh place in 1980 to becoming the world's biggest manufacturer in 2011. Aside from the fact that China is home to subsidiaries of large U.S. companies, Chinese firms have benefited from having a huge population with growing income to sell to. The government has also been notoriously protectionist in order to protect domestic firms, while providing those firms with subsidies, land and credit.

 

Investment in infrastructure has also played a large role. In November 2008, when the global financial crisis was expected to prompt a slowdown of export activity, the country announced a massive stimulus package of $585 billion. "China may have high levels of official corruption and a bloated state sector, but the infrastructure it has built is very real and used by hundreds of millions of people every day. [It] will be contributing to Chinese GDP for the rest of the century," said Babones.

 

Clash of the Titans...and the State

Bloomberg reported that at an entrepreneurship conference in Zhengzhou, China, Jack Ma recently said that the world will see much more pain than happiness as the Internet disrupts the economy and the presence of automation grows. Ma says this as chief economy-disrupter in China, and Bloomberg speculated that he was anticipating resistance as his business expanded into various areas.

"Officially, the government hasn't opened up strategic sectors, including finance, to private players. In reality, though, firms like Tencent, through it's almost ubiquitous WeChat messaging platform, have already moved far ahead of China's stodgy and debt-laden state banking system," wrote CNBC's Martin Soong, who expects tension in the country to rise between China's private sector and state-controlled businesses. 

 

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