World prosperity has already tripled in this century; China currently surpasses the United States

World wealth reached $ 514 trillion last year and $ 1156 trillion at the beginning of this century. This is according to a report by the McKinsey Global Institute, based on an analysis of the national balances of ten countries that represent more than 60 percent of world revenue.

Researchers insist that China has now overtaken the United States in the world rankings.

China

“There is global prosperity Three times in the last two decades Is known, “said John Mishke, a researcher at the McKinsey Global Institute.” We are richer now than ever before.

China’s wealth was $ 120 trillion last year, up from just $ 7 trillion at the turn of the century. It was the year before the Asian country became a member of the World Trade Organization (WHO), which accelerated China’s economic growth.

The United States, whose wealth growth has been hampered by relatively moderate increases in real estate prices, has more than doubled to $ 90 trillion over the same period.

Researchers also note that in two countries – the two largest economies in the world – two-thirds of the wealth is concentrated in just 10 percent of households.

“The share of the wealth of the rich has increased further over the last twenty years,” the researchers point out.

Inequality

Researchers also found that 68 percent of the world’s wealth is stored in real estate. The reserve consists mainly of assets such as infrastructure, machinery and equipment. To a lesser extent, so-called intangible assets, such as intellectual property and patents, play a role in global wealth.

McKinsey’s report does not consider financial assets. “After all, these assets are offset by obligations,” the researchers note. “After all, the corporate bond that an individual investor holds in his or her portfolio is simultaneously a company’s outstanding debt.”

“The rise of wealth over the past two decades has outpaced growth in global GDP,” the researchers said. “That event was triggered by a rise in real estate prices, which has risen sharply as interest rates have fallen.”

“The imbalance between assets and income is growing. This raises questions about the sustainability of the prosperity increase. Many side effects need to be taken into account.

The real estate crisis

“Rising real estate values ​​make it impossible for many people to buy their own home,” the researchers said. “These issues could increase the risk of a financial crisis, as the United States experienced after the real estate bubble burst 13 years ago.”

“China could face similar problems with recent developments with property developers like Evergrande.”

McKinsey emphasizes that “the best solution is for global wealth to find a way to increase global GDP.”

“The fall in property prices will become a nightmare, destroying a third of world wealth.”