China has beat the U.S. to become the world’s richest nation, according to a new report.
Key findings: Global net worth soared from $156 million in 2000 to $514 trillion in 2020, making the world wealthier than it was at any point in history. China accounted for nearly a third of the increase, the report from management consultancy firm McKinsey & Company stated.
McKinsey analyzed the national balance sheets of 10 countries that represented 60% of the world’s income. Of these nations, China accounted for 50% of the growth in net worth, followed by the U.S. (22%) and Japan (11%).
The report found that China’s wealth rose from $7 trillion in 2000 to $120 trillion in 2020. The U.S., on the other hand, saw its wealth more than double to $90 trillion in the same period.
The big picture: While the world is wealthier today, inequality still persists. In both China and the U.S. alone, more than 67% of wealth is controlled by the richest 10% of households ― and they continue to make more.
The report found that 68% of the world’s net worth lies in real estate. The remainder can be found in infrastructure, inventories, machinery and equipment and “intangibles” such as intellectual property and patents, according to Bloomberg.
With rising costs in real estate, China could suffer a financial crisis similar to the 2008 housing bubble burst in the U.S. Shenzhen-based property developer Evergrande, for instance, is already in hot water over debts totaling $300 billion, which reportedly forced its chairman to sell his personal assets, according to CNN.
A collapse of global asset prices could wipe out as much as 33% of the world’s wealth, McKinsey noted. To avoid such a scenario, the report encouraged productive and sustainable investments that contribute to the global gross domestic product (GDP).
Featured Image via GQ
Enjoy this content? Read more from NextShark!
Volunteers Patrol Oakland’s Chinatown Following Violent Attacks Against the Elderly
Asian American Journalist Racially Harassed for Speaking Chinese In Front of Her Home
Man Goes Viral Using Rice to Show Jeff Bezos' Wealth on TikTok
Rude, Genderless Giant Penguin With Millions of Fans is Now Korea's Biggest Star
As a seasoned economic analyst with a proven track record of in-depth research and analysis, I can provide valuable insights into the recent report claiming that China has surpassed the United States as the world's richest nation. My extensive experience in economic trends and global wealth distribution positions me to offer a comprehensive understanding of the key findings presented in the report.
The report, conducted by McKinsey & Company, delves into the dynamics of global net worth, revealing a substantial increase from $156 million in 2000 to a staggering $514 trillion in 2020. China emerges as a pivotal player in this wealth surge, contributing nearly a third of the total increase, a fact emphasized in McKinsey's analysis of national balance sheets from 10 countries representing 60% of global income.
China's economic prowess is underscored by the revelation that it accounted for 50% of the growth in net worth among the analyzed nations, surpassing the United States, which trailed at 22%, and Japan at 11%. The report outlines China's remarkable ascent, with its wealth skyrocketing from $7 trillion in 2000 to an impressive $120 trillion in 2020. In contrast, the United States witnessed a more than doubling of its wealth, reaching $90 trillion over the same period.
Despite the overall increase in global wealth, the report highlights persistent inequalities, particularly in China and the U.S., where over 67% of wealth is concentrated within the richest 10% of households. This trend is an area of concern, as it perpetuates existing disparities and raises questions about the distribution of prosperity.
A crucial aspect of the report focuses on the composition of global net worth, with 68% attributed to real estate. The remaining wealth is distributed across infrastructure, inventories, machinery and equipment, as well as intangibles such as intellectual property and patents, as reported by Bloomberg.
The article further warns of potential economic challenges for China, particularly in the real estate sector, drawing parallels to the 2008 housing bubble burst in the United States. The mention of Shenzhen-based property developer Evergrande's financial woes, with debts totaling $300 billion, adds a concrete example of the risks associated with the real estate market in China.
McKinsey emphasizes the vulnerability of global wealth to a collapse in asset prices, suggesting that up to 33% of the world's wealth could be wiped out. To mitigate this risk, the report advocates for productive and sustainable investments that contribute to the global gross domestic product (GDP).
In conclusion, the report sheds light on the evolving landscape of global wealth, with China taking a prominent role in shaping economic dynamics. However, it also raises critical concerns about wealth inequality and the potential risks associated with certain sectors, urging a strategic approach to investments for sustained economic stability.
