China is world's richest nation now, ahead of the US
New Delhi : Over the last two decades, China's wealth has tripled to make it surpass the US on the top two spot.
That's one of the takeaways from a new report by the research arm of consultants McKinsey & Co. that examines 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.
According to the study, the net wealth increased to $514 trillion in 2020, from $156 trillion in 2000. China accounted for almost one-third of the total increase. Its wealth skyrocketed to $120 trillion from a mere $7 trillion in 2000, the year before it joined the World Trade Organization, speeding its economic ascent.
The U.S. net worth doubled over the same period and rose to $90 trillion.
As computed by McKinsey, 68% of global net worth is stored in real estate.
The steep rise in net worth over the past two decades has outstripped the increase in global gross domestic product and has been fueled by ballooning property prices pumped up by declining interest rates, according to McKinsey. It found that asset prices are almost 50% above their long-run average relative to income. That raises questions about the sustainability of the wealth boom.
"Net worth via price increases above and beyond inflation is questionable in so many ways," Mischke said. "It comes with all kinds of side effects."