China Becomes World's Richest Country, Overtakes US To Grab The Top Spot
China has surpassed the United States to become the richest nation in the world as global wealth tripled over the past two decades, according to a new report by the research arm of consultants McKinsey & Co.?
The report examined the national balance sheets of ten countries representing more than 60% of world income.
"We are now wealthier than we have ever been," Jan Mischke, a partner at the McKinsey Global Institute in Zurich, said in an interview.
The worldwide net worth rose to $514 trillion in 2020, from $156 trillion in 2000, according to the research. China emerged at the top of the worldwide list, accounting for almost one-third of the increase.
Richest 10%
China¡¯s wealth jumped to $120 trillion in 2020 from just $7 trillion in 2000. This marks a jump of $113 trillion in 20 years, helping the nation surpass the United States in terms of net worth.
During the same period, the US saw its net worth more than double to $90 trillion. However, the nation could not beat China due to muted increases in property prices.
In both countries -- the world¡¯s biggest economies -- more than two-thirds of the wealth is held by the richest 10% of households, and their share has been increasing, the report said.
Where is the wealth stored??
As computed by McKinsey, 68% of global net worth is stored in real estate. The balance is held in such things as infrastructure, machinery and equipment and, to a much lesser extent, so-called intangibles like intellectual property and patents.
It's effects?
Surging real-estate values can make home ownership unaffordable for many people and increase the risk of a financial crisis -- like the one that hit the U.S. in 2008 after a housing bubble burst. China could potentially run into similar trouble over the debt of property developers like China Evergrande Group.
The resolution
The ideal resolution would be for the world¡¯s wealth to find its way into more productive investments that expand global GDP, according to the report. The nightmare scenario would be a collapse in asset prices that could erase as much as one-third of global wealth, bringing it more in line with world income.
US-China rivalry?
The United States and China are profoundly at odds on how people and economies should be governed.
The two powers jockey for influence beyond their own shores, compete in technology, and maneuver for military advantages on land, in outer space and in cyberspace.
But they are also major trade and business partners, making their rivalry more complex than those of the Cold War to which it is sometimes compared.
The Biden administration has called managing America¡¯s relationship with Beijing ¡°the biggest geopolitical test of the 21st century.¡±
That complexity will be in full play when Biden holds a virtual summit China¡¯s top leader, Xi Jinping.
Where India stands?
India began its economic reform in the early 1990s, more than a decade after China. But in the last-quarter century, China has accelerated its economy, while India¡¯s has weakened comparatively.?
Recently, on the occasion of 30 years of economic liberalisation, the chairman of the India's largest company by market value Reliance Industries Ltd Mukesh Ambani said bold economic reforms helped GDP of $266 billion in 1991 grow by over ten times.
"India transformed from an economy of scarcity in 1991 into an economy of sufficiency in 2021. Now, India has to transform itself into an economy of sustainable abundance and equitable prosperity for all by 2051. In India, equity will be at the heart of our collective prosperity," he wrote in a column in The Times of India.
