China overtakes the U.S. to become world’s richest country; Latin America poised for rapid growth

Global wealth tripled over the last two decades, with China leading the way and overtaking the U.S. for the top spot worldwide, Bloomberg reported. A report by McKinsey & Co. that examines the national balance sheets of ten countries representing more than 60 per cent of the world’s income.

China will increase its economic advantage over the U.S. in coming years, an economic report predicts.

China accounted for almost one-third of gains in global net worth over the past two decades, the report said.

“The world is now wealthier than we have ever been,” Jan Mischke, a partner at the McKinsey Global Institute in Zurich, said in an interview. “What is changing is the distribution of that wealth. In the coming decades, not only will China continue to gain a larger share but so will other regions, particularly Latin America.”

Net worth worldwide rose to $514 trillion in 2020, from $156 trillion in 2000, according to the study. China accounted for almost one-third of the increase. The country’s 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 report said.

The U.S., held back by declines in manufacturing and property prices, saw its net worth more than double over the last 20 years, to $90 trillion. “The U.S. will continue its economic growth but at a slower rate, partly because of an aging population that requries increased expenditures on health care and other social services,” the report said.

In both China and the U.S. — the world’s biggest economies — more than two-thirds of the wealth is held by the richest 10 per cent of households, and their share has been increasing, the report said.

As computed by McKinsey, 68 per cent of global net worth is stored in real estate. The balance is held in such things as infrastructure, machinery and equipment and, to a much lesser extent, so-called intangibles like intellectual property and patents, it added.

Growth in Latin America will accelerate in the coming decades, McKinsey says, but will be held back in the short term because of effects of the Covid-19 pandemic. “The region could not afford to pump money into the economy to mitigated the impact of the coronavirus and it may take three to four years to make a full recovery. After that, as its economies begins to wean themselves of reliance on non-renewable resources, it will become the world’s most prominent growth engine.”