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Global wealth surges as China overtakes US

China has crossed United States to become the richest nation in the world. As per the recent report by Mckinsey & Co, the global wealth has almost increased threefold from around $150 trillion in 2000 to almost $515 trillion in 2020.

China has surpassed the United States to become the richest nation in the world, as per the recent analysis report released by Mckinsey & Company. Other key takeaways from the report which is based on an assessment of the national balance sheet of the top 10 richest countries that account for 60% of total wealth includes, net worth worldwide rose from $156 trillion in 2000 to $514 trillion in 2021. China is the key catalyst in such a rise since its wealth increased drastically from $7 trillion in 2000 to $120 trillion in 2020 after it joined the World Trade Organization.

While the net worth of China multiplied 20 times, net worth of the United States doubled to $90 trillion driven by an increase in property price. As per the reports, real estate accumulates 68% of the total wealth. The balance is held by infrastructure, inventories and stocks, machinery and equipment, houses and other buildings, intellectual property, and patents. Financial assets like bonds, coupons, etc. aren’t taken into consideration as they usually adjust the liabilities. But experts have raised concerns over the steep rise in the net worth graph as majority of the growth is driven by increase in real estate prices and not by growth in gross domestic product.


Apart from China and US, the countries in the report included Germany, Sweden, Mexico France, UK, Japan, Canada, and Australia. Experts suggest that surging real estate prices can lead to another financial tension. China’s Evergrande crises are still not resolved. Evergrande has $310 billion of liabilities. If the situation isn’t handled meticulously, it can lead to a liquidity crunch as observed in the case of the 2008 US housing bubble burst. Reports further suggested that wealth should wisely be spent on resources that increase the productivity. It will also balance the gross domestic product and at the same time it will bring more economic and financial stability across the nations. 


By:-

Sushant

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