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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