The United States has been one of the wealthiest countries globally for the past decade. It’s only recently that many other countries have also gained wealth at staggering rates.
China has seen an exponential amount of wealth over the past twenty years, which begs the question, is China richer than the USA?
China has beaten the United States in terms of wealth as its net worth has grown from $156 million in the early 2000s to $514 trillion in 2020.
So, in the last two decades, China has nearly gained more than ⅓ of its wealth and continues to grow.
The United States is still gaining wealth, just not as exponentially as China has been.
So, what does this entail for the world? Is China currently holding most of the wealth in the world?
Below, we will take a closer look at the wealth distribution by country and what factors go into it.
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McKinsey & Co. is a team of consultants who have taken on analyzing wealth distribution. Their report found that China has tripled its wealth over the past twenty years.
They did the research by examining the national balance sheets of 10 of the wealthiest countries in the world.
These countries represent up to 60% of the world’s income.
Their findings suggest that the world’s total income has risen from $156 trillion in 2000 to $514 trillion in the past twenty years.
If we continue this trend, it’s safe to say that the wealth distribution will continue to increase as more countries gain more assets.
China has emerged as the number one wealth owner and accounts for at least ⅓ of the increase in the total global revenue increase.
That being said, China’s wealth has increased from $7 trillion in 2000 to $120 trillion in 2020.
Considering that, you can see that China’s wealth has accounted for at least a $113 trillion increase in the past twenty years.
This has primarily caused China to surpass the United States, which only saw a rise of double to $90 trillion in 2020.
The problem with growing wealth is that the United States and China make up most of the global income.
The problem with this is that the wealth distribution is becoming harder for other countries to bridge.
While some can gain some wealth, likely, some countries won’t see the exponential increase that could take them to the top.
Another issue with this is that the exchange rates for smaller countries worsen the global economy.
Many more minor currencies cannot keep up with the rates at which wealth is growing. So, the power of some currencies is bound to keep falling if there is no change in global wealth.
Aside from that, the increase in worth has also contributed to high real estate prices. These prices have passed inflation and made it almost impossible for people to own a home.
This is especially true in places like China, as there have been fewer real estate sales over the years.
While the whole world is becoming wealthier, the problem is that it’s only a select few who are making a profit.
Of the rising 67% of wealth from the United States and China, only 10% of households contribute to these numbers.
As the years progress, they will become exponentially richer, creating inequality.
Much of the rising wealth is tied to real estate in both the United States and China. The United States has already suffered a 2008 housing bubble collapse, and China will likely get one due to rising costs in real estate.
According to McKinsey, if this happens, a total of 33% of the world’s wealth could collapse. So, there need to be sustainable investments that help contribute to a better global gross domestic product (GDP).
Otherwise, the world economy will suffer, leading to many financial issues in the future.
The most affected people are the common folk, who suffer more than the wealthy. While the rich end up losing a lot of assets, this doesn’t make their lives unlivable.
As the standard person, a loss of a percentage of their wage can completely change how they have to live.
So, it’s good to keep track of what’s going on. Individuals can keep a close eye on what’s happening and be prepared for a potential drop.
Saving up a bit for a crisis is also recommended, as that ensures that you will have some backup money if you face challenging times globally.
The Wealthiest Countries
Here is a quick list of the wealthiest countries in the world and their increased net worth over the past twenty years:
- China – $113 trillion
- United States – $50 trillion
- Germany – $14 trillion
- France – $14 trillion
- The United Kingdom – $7 trillion
- Canada – $7 trillion
- Australia – $7 trillion
- Japan – $3 trillion
- Mexico – $3 trillion
These numbers could change over the next decade, but it’s safe to say that China and the United States will continue to see growth.
Other countries are very behind but can still increase their current wealth.
In the previous two decades, China’s net worth has risen by $7 trillion, trumping the United States.
Its net worth in 2020 was $120 trillion, while the United States was at $89 trillion. The United States shares were 17%, then Japan followed at 7% worth.
If the world stays on the same pathway, China has a high chance of overtaking the United States economy.
Currently, China’s net worth already trumps the United States by almost ⅓ of its wealth. By 2030, China is estimated to overtake the United States in nominal US dollars.
The United States is known for having a high income and low unemployment rates. However, Luxembourg is the wealthiest country in the world.
The next is Qatar, which is a significant oil exporter. The United States only ranks as the 8th most prosperous country.
Yes, China is the richest country in the world if we are going by only wealth. However, using GDP per capita, the United States takes the lead, with China being the second biggest with a $10,434.80 GDP.
The United States has a $63,413.50 GDP per capita.
China has finally surpassed the United States in wealth, and it was bound to happen over the past few decades.
Now, it’s up to China to keep their wealth and learn how to distribute it properly. If they focus mainly on real estate, they can easily follow the same path as the United States did with the 2008 housing crash.
Wealth will continue to grow over the next decade, and we can easily see a shift from other countries.
However, the wealth is mainly exponential, which means countries not in the top 10% may not catch up.
Hopefully, this has helped you learn more about the global wealth situation and how China surpassed the United States.