Ka-China! PRC Reportedly Overtakes US as World’s Wealthiest Nation
17:48 GMT 16.11.2021 (Updated: 17:49 GMT 16.11.2021)
© AP Photo / Kin Cheung
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Western economists, the World Bank, the International Monetary Fund, and major global investment banks expect the People’s Republic to formally surpass the US to become the world’s largest economy by GDP by the late 2020s. China’s GDP is expected to hit $15.6 trillion in 2021, compared to $23.2 trillion for the US.
China has overtaken the United States to become the world’s single wealthiest nation in terms of total net worth, McKinsey & Company, a global management consulting firm, has concluded.
In a report released Monday, the consultancy calculated that the People’s Republic accounted for nearly one-third of total global growth over the past twenty years, rising by more than over $110 trillion from a year 2000 starting point of ‘just’ $7 trillion.
The report, which measures net worth accumulated by ten countries accounting for over 60 percent of global GDP, calculated that the US posted a smaller, but also impressive $45 trillion gain in net worth, doubling from the figure posted in the year 2000.
In both countries, over 2/3 of the wealth was said to have been concentrated among the top ten percent of households.
Under the report’s methodology, about 68 percent of net worth is based in real estate –prices for which have jumped substantially across much of the world over the past twenty years. The calculations are therefore potentially questionable amid out of control housing prices in many US cities, and somber warnings coming out of China that construction giant Evergrande is on the brink of ruin, and could take the world economy with it if implodes under the weight of its $305 billion debt.
21 October 2021, 11:37 GMT
The report also found that Japan – the 1980s economic powerhouse once predicted to conquer the world, economically speaking, dropped in the share of its share of the global net worth pie, from 31 percent in the year 2000 to 11 percent today.
McKinsey & Company stressed in its report that the traditional link expected to be observed between ‘net worth’ and gross domestic product (GDP), which measures the monetary value of final goods and services, is no longer applicable, with GDP growth slowing to single digits in many countries, China excepted, or even going backwards, as ‘net worth’ continued to grow. Today, the US’s net worth is estimated to be about 4.3 times the country’s GDP, while China’s is a whopping 8.2 times higher.
Commenting on the report, McKinsey Global Research Institute partner Jan Mischke boasted to Bloomberg that “we are now wealthier than we have ever been,” referring to the ten countries in question.
Mischke admitted, however that the speculative growth in real estate prices is probably unsustainable, stressing that “net worth via price increases above and beyond inflation is questionable in so many ways,” and “comes with all kinds of side effects,” – such as making it impossible for young people to buy homes. Under McKinsey’s ‘worst case scenario’, one third of the total global wealth as measured by ‘net worth’ could collapse in a massive market correction.
Americans owe an estimated $85 trillion in debt, or about $257,000 for every man, woman and child in the country, with federal government debt rapidly approaching $29 trillion, even as the White House and Congress continue to push new multi-trillion dollar spending packages.
China’s total private and public debt is estimated to amount to $5.6 trillion, according to the Institute of International Finance, a Washington, DC-headquarters banking association.
