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Purchasing Power Parity and Gini-coefficient in China: how to be rich and poor at the same time.

The Chinese economy is going to be the world’s biggest economy earlier than expected. Reason the more to give a closer look at the statistics of economy, income and consumption in China.
 
When we look at GDP growth we see continuing high growth since the 1980s, although recent levels are a bit less exuberant. The world ranking of the Chinese economy in US Dollars may show a significant gap with the number 1 the US, but in Purchasing Power Parity (PPP) this gap is significantly smaller and can easily be closed in the next year or so.
 
But that is macro-talk. On a GDP per capita basis the difference between China and the US remains big: GDP per capita in China is only 20% of the US! Could this change as rapidly as well as?
At least the Chinese government/communist party have recognized in the recent Reform Plan that the distribution welfare and income among the population is an important policy issue. As a result we expect the growing in-equality in China (including the growing gap between urban and rural population) to be halted. The continuing rise of the Gini-coefficient in China (rose from Western European level of around 0.3 to close to 0.5 in the last 20 years) should thus level out and maybe even fall. And consumption instead of investment will become a driving force in China’s economic future growth.
All this provides a lot of food for thought for investors.

Stephane Lods joins the International Advisory Panel

Mr. Lods is the founder of Analytical Research and has over 35 years experience in finance and 20 years in hedge funds and alternative assets. Mr. Lods was a co-founder of Eurogestion & Partners S.A. (EG).  Under his leadership and guidance, the firm grew to over $1.5 billion in assets under management (advisory). He is a pioneer in hedge fund of funds investing and consultancy. Prior to founding EG, Mr. Lods consulted for a European family and established a family office in Geneva, which he managed while investing mainly in alternative assets and third-party managers. Mr. Lods served on various investment boards providing advice to Swiss private banks and their Luxembourg SICAV alternative investments. Since 2003, Mr. Lods sits as a judge for IPE’s (Investment & Pensions Europe) Hedge Fund section and is an appointed member of the Executive Committee of the Convention of Independent Financial Advisors (CIFA) and a CIFA permanent representative to the United Nations. CIFA is a non-governmental organization in special consultative with the Economic and Social Council of the United Nations. Previously, Mr. Lods held numerous investment roles with premier institutions such as Bucephale Group (Founding Partner), which was the investment advisor of CreInvest AG, the first listed company on the Zurich Stock Exchange to invest in hedge funds, Union Bancaire Privée and Lombard Odier & Cie. Mr. Lods attended the Technicum Institute of Geneva majoring in Architecture.