The Study On Asset Selection And Family Portfolio Of Chinese Middle Income Group

Since the reform and opening-up in 1978,China has witnessed a great growth in its economy.In 2010,measured by World Bank standards,China became an upper middle income country,and is now at a crucial step of crossing the middle-income trap.Along with the process,the income condition and wealth level of Chinese households have been greatly improved.According to the Global Wealth Report of Credit Suisse the total household wealth of China has reached 23 trillion USD in 2016,which lay in third place just behind the United States and Japan.As a representative colony,the middle income group has gained wide attention in the analysis of China’s income distribution and wealth inequality.In terms of the total amount,China has developed the largest middle income group around the world.However,the country’s middle income group proportion still needs to be increased if considered from a relative perspective.To further build up the country’s middle income group has become an important challenge in forming a well-off society in an all-round way.How to further increase the size of the middle income group? Based on the study of household asset selection and investment portfolio construction,this paper tries to answer the question at a household finance point of view.And the aim of our study is to provide a theoretical reference on expanding the size of the middle income group.The main parts of this paper are as follows: First,in the second chapter we combine and sum up the current domestic and foreign literature about middle income group in order to find an accuracy determination method of the colony.Then in chapter three we take use of the latest income statistics of the World Wealth & Income Database and try to trace the annually income level increase as long as the size changing of Chinese middle income group since 1978.The fourth and fifth chapters study the income and wealth composition of middle income group by using the household microdata from The Survey of Household Finances and Attitudes(SHFA)and China Family Panel Studies(CFPS).And in the following step we analyse the asset selection and investment construction conditions of middle income group through empirical means to point out its wealth allocation characteristics.In the sixthchapter,the quantile regression method is organized to study the contribution of effective household portfolio on family income.Our results show that the financial markets can play an active role in expanding the middle income group.Chapter seven then study the middle income households’ portfolio from an inflation-hedging point of view.Based on the above analysis five main conclusions have been reached in this paper.1.Chinese middle income group has enjoyed a great growth both in family income level and colony size.The whole group now accounts for 36% population of the society,forming a pyramid income distribution structure.However,when viewed from a relative perspective,the middle income group still needs to be expanded.2.In terms of income composition,the importance of property income is increasingly enhanced for the middle income colony.As for the wealth allocation part,safe assets and real estate make up the major part of household assets,but the middle income group shows a preference for the risk assets.3.The increase of family income promotes households’ financial markets participation.But it’s not the sole factor.After controlling the impact of family income,education as well as work stability and household finances consciousness all have positive impacts on middle income group’s risk assets taking process.4.Effective finance investment can significantly improve family income conditions.And the impact presents a growing effect as the family income increases.The conclusion still holds when the endogenous problems are handled in the model.Our results indicate that the financial markets can play an active role in expanding the middle income group.5.By holding a lot of real estate,stock,fund and other inflation-hedging assets in the household portfolio,middle and high income groups gain a huge advantage over the low income people against inflation.We should guide the low income group to optimize their asset allocation and pay special attention in reining back inflation.