(TibetanReview.net, Nov16’21) – China calls itself a socialist country. But not only is it now the world’s richest country but also 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% of households, according to a report by the McKinsey Global Institute in Zurich.
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. 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 US, held back by more muted increases in property prices, saw its net worth more than double over the period, to $90 trillion, the report said.
In both countries, more than two-thirds of the wealth is held by the richest 10% of households, and their share has been increasing, the report said.
According to McKinsey, 68% 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.
Surging real-estate values can make home ownership unaffordable for many people and increase the risk of a financial crisis – like the one that hit the US in 2008 after a housing bubble burst. China could potentially run into similar trouble over the debt of property developers like China Evergrande Group, noted Bloomberg.com Nov 16.
The report said financial assets were not taken into account for the computation of global wealth because they are effectively offset by liabilities.