New Delhi: A recent report by the research wing of the consulting firm McKinsey & Co. stated that China has topped the list of richest nations worldwide while global wealth has increased three times over the last two decades.
The consulting firm takes national balance sheets of ten nations which represent more than 60 percent of the world income, reports Bloomberg.
The study stated that net worth worldwide has risen to $514 trillion in 2020 from $156 trillion in 2000. Out of this increase, China accounted for almost one-third of it. The country’s net worth ascended to $120 trillion in 2000 from $7 trillion in 2000.
"We are now wealthier than we have ever been," said Jan Mischke, a partner at the McKinsey Global Institute in Zurich in an interview.
The report said that in both the world’s biggest economies, the United States and China, more than two-thirds of the wealth was owned by the richest 10 percent of households. This share has been increasing, the report said.
The report further stated that out of the cumulative global net worth, 60 percent of the share belongs to real estate. Other subheads include infrastructure, machinery, and to some extent intangible assets like intellectual property and patents.
Bloomberg reported that financial assets are not taken into account for the computation of global wealth because they are effectively offset by liabilities.
McKinsey in its report said that the downside of the increasing global wealth is that it is fueled by increasing property prices with slashed interest rates.
"Net worth via price increases above and beyond inflation is questionable in so many ways,” said Mischke. "It comes with all kinds of side effects," he added.
The report further said that increase in property rates can make affordable housing more difficult and may increase the risk of a financial crisis, like the one that happened in the US in 2008. China could also possibly face small troubles over the debt of property developers like the China Evergrande Group.
The report made a suggestion that the world should be parked in more productive investments that expand global GDP. A collapse in asset prices which could erase around one-third of the global economy is a nightmare, the report warned.