In both powers, the world’s largest economies, more than two-thirds of the wealth is in the hands of the richest 10% of households, and their share has been increasing.

The United States has been stripped of its title as the world’s richest country, with China now the nation that occupies this coveted position. The change in the ranking of world wealth was announced Monday in a report  by consulting firm McKinsey & Co.

The report, entitled ‘The Rise of the Global Balance Sheet: How Productively Are We Using Our Wealth?’, Examines the national balance sheets of ten countries that account for more than 60% of world income .

Among the ten countries, China accounted for 50% of the growth in net worth, or wealth, between 2000 and 2020, followed by the United States, with 22%. Japan, which owned 31% of the wealth of the ten economies in 2000, only got 11% in 2020.

China skyrocketed its wealth to $ 120 trillion, up from $ 7 trillion in 2000. On the other hand, the United States more than doubled its net worth to $ 90 trillion,  estimates  Bloomberg.

In both powers, the world’s largest economies, more than two-thirds of wealth is in the hands of the richest 10% of households , and their share has been increasing, the report indicates.

In the United States, the amount of wealth in the country held by the richest 10% of households grew from 67% in 2000 to 71% in 2019. While in China, the richest 10% of households owned 48% of the country’s wealth in 2000, and in 2015 the value increased to 67%.

Perfect scenario for a financial crisis?

McKinsey revealed that 68% of the world’s net worth is stored in real estate, the rest is in infrastructure, machinery and equipment and, to a lesser extent, in intangible assets, such as intellectual property and patents. The sharp increase in net worth over the past two decades has outpaced the increase in global gross domestic product and has been driven by rising property prices, aided by lower interest rates.

But this could have negative side effects, as rising real estate values ​​can make home ownership unaffordable for many, setting the stage for a financial crisis  like the one that hit the United States in 2008 after the bubble burst. real estate. China could have similar problems from the debt  of real estate developers like China Evergrande Group.

According to the report, the smartest way to prevent a crisis may be for decision makers to work to stabilize and reduce the balance sheet relative to GDP through nominal GDP growth. To do this, they would have to redirect capital toward new productive investments in real assets and innovations that accelerate economic growth.

The nightmare scenario would be a collapse in asset prices that could erase up to a third of the world’s wealth, bringing it more in line with world income.