China Has Officially Become The Richest Country In The World – Leaving The U.S Behind

In the race for global economic leadership, China has left the United States behind. It is official now that China has overtaken America as the world’s richest nation. Over the last two decades, global wealth has tripled, with China leading the way and surpassing the United States as the world’s wealthiest country, as reported by Bloomberg.

That’s one of the key inferences from a new analysis by McKinsey & Co.’s research arm, which looks at the national balance sheets of ten countries that account for more than 60% of global revenue. According to the analysis, global net worth increased from $156 trillion in 2000 to $514 trillion in 2020. China accounted for about a third of the rise. Its wealth soared from $7 trillion in 2000, the year before it joined the World Trade Organization, to $120 trillion in 2010, accelerating its economic rise. Despite more moderate growth in home values, the US saw its net worth more than double over the period, to $90 trillion.

According to the report, the wealthiest ten percent of households own more than two-thirds of each country’s wealth, and their proportion has been growing.

Image Courtesy: Bloomberg

Real estate currently accounts for 68% of worldwide net value, and it will account for two-thirds of net worth by 2020. The rest is made up of infrastructure, machinery, and equipment, as well as intellectual property and patents, to a lesser extent.

Financial assets are not included in the global wealth assessment since they are offset by liabilities. Corporate bonds, for example, are nonetheless akin to an I-owe-you from that corporation if held by a specific investor. However, in the last two decades, net worth has risen faster than global GDP, thanks in large part to rising housing values, which the research attributes to low-interest rates. In comparison to income, asset prices have increased to about 50% greater than their long-run average, according to the report. As a result, some may begin to doubt the modern wealth boom’s long-term viability.

The report further mentions that the only way to deal with these world-historical snags is for the world’s riches to be directed toward more productive investments capable of significantly increasing global GDP. However, if the worst-case scenario occurs, asset prices might plummet, wiping out up to a third of global wealth as the bottom line falls back to equal global income. These are fascinating times, in part because the world’s wealthiest people are becoming far wealthier than they have ever been, while the poorest people in developed countries are beginning to suffer at levels not seen in at least half a century.

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