Report: China is now the world's richest country
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
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