Cryptocurrencies Fail to Attract Chinese Middle-Class Investors

A new study has shown that Chinese middle-class investors are not keen on investing in cryptocurrency, with less than 10% interested in digital assets.

A study led by university professor and financial writer Wu Xiaobo has found that the Chinese middle class is less likely to invest in digital currencies than in other asset classes. The 2018 White Paper on the New Middle Class says that less than 10% of the new middle class in China is investing in cryptocurrency, TechNode reported.

This is the third installment of the white paper published by Wu, a former EMBA program professor at Jinan University and Shanghai Jiaotong University. The latest study aims to dig deeper into the purchasing profile of China's middle class while also exploring aspects of family, career, investments, and values.

The findings led Wu and his team to conclude that Chinese middle-class investors are largely averse to risk – merely 9.2% of those polled said that portfolio losses above 15% were acceptable. China’s existing ban on digital currency trading and initial coin offerings (ICOs) coupled with the volatile cryptocurrency prices make it highly unlikely that digital asset investments will grow in the near term, according to the researchers.

A recent report by the China Money Network showed that the sharp drop in virtual currency prices had impacted Chinese listed companies negatively, particularly those with ambitions to launch blockchain projects. Only a fraction of the listed companies that announced blockchain-related market entries in 2017 actually launched, with only nine out of 34 enterprises with big blockchain plans having developed dependable services and products.

However, Wu’s report noted the growing trend on Chinese online forums for discussing the potentials of digital currencies as a viable means of wealth protection. Interest in this option was boosted after reports that Venezuelan and Turkish residents had started buying cryptocurrencies to hedge against inflation, political turmoil, and exchange rate risks.

The white paper is based on a poll of 100,000 individuals plus one million pieces of data from various sources.