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Nov 20, 2021

China world’s richest country now

Foreign Affairs News Desk

China has beat the U.S. to become the world’s richest nation, according to a new report.

Global net worth soared from US $156 million in 2000 to US $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.

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.

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 has been prepared after examining the national balance sheets of 10 countries, representing more than 60 per cent of world income.

Apart from China and the US, the countries in the report included Germany, France, UK, Japan, Sweden, Mexico, Canada and Australia.

In both the US and China, the two biggest global economies, more than two-thirds of the wealth is concentrated in just 10 percent of the richest households. About 68 percent of the global net worth is stored in real estate, as per the report.

The report also indicated that 68 per cent of global net worth is stored in real estate and the balance is held in assets such as infrastructure, machinery and equipment. Intangible assets like intellectual property and patents also make up a small amount of global net worth.

The report by McKinsey & Co also indicated the steep rise in net worth over the past two decades has outstripped the increase in global gross domestic product and has been fuelled by skyrocketing property prices as a result of declining interest rates.

The research found that asset prices are almost 50 per cent above their long-run average relative to income. That raises questions about the sustainability of the wealth boom.

In an interview with Bloomberg TV, Jan Mischke, a partner at the McKinsey Global Institute in Zurich, said, “We are now wealthier than we have ever been.”