Economic might is achieved through the accumulation of wealth and exercising socio-economic influence over the world. China and the US have been in a tussle—sort of a tug of war—to determine who is more powerful. While the US has been exerting its influence and hegemony over the Western and Eastern hemispheres during most parts of the post-Second World War, China continued to rise as a worthy contender.
According to a recent report by McKinsey & Co, China has finally surpassed the United States as the world’s richest nation. Data, details, statistics, and facts were collected and examined to extract these numbers.
The national balance sheets of as many as ten countries were examined that represented over 60 percent of the global income. “We are now wealthier than we have ever been,” said Jan Mischke, a partner at the McKinsey Global Institute in Zurich.
According to the report, global net worth rose to $514 trillion in 2020, from $156 trillion in 2000. China surfaced as the first country on this list. It accounts for almost one-third of the increase.
In two decades—from 2000 to 2020—China’s wealth augmented from $7 trillion to $120 trillion—an increase of $113 trillion. Interestingly, during the same period, the US had an increase of $90 trillion in its net worth. The US could not surpass China because of the muted rise in the prices of property.
The report also shared that real estate holds 68 percent of the global net worth. This includes infrastructure, equipment, and machinery. Patents and intellectual property—categories under intangible assets—also comprise this net worth.
China emerging in the lead will bring to the fore various diplomatic and perhaps stringent action plans from the US to counter Beijing’s rise to global dominance. The US, considering its competitive nature in geopolitical affairs and global economic domain, will try to return as the top country.
This may be a natural reaction, however, given China’s economic status, it will take time—or perhaps be a next-to-impossible task for the US to accomplish. According to Wind Information data, the US gross domestic product in 2020 contracted by 2.3 percent to $20.93 trillion.
During the same period, China’s GDP increased by 2.3 percent to 101.6 trillion yuan, which equals nearly $14.7 trillion. Analysts also blame the pandemic-led lockdown to have stalled the US economy. Where production was low, unemployment increased.
It was over 14 percent in April 2020 and remained above 10 percent until July 2020. According to a report by CNBC.com, economists argue that China’s recovery in 2020 was because of traditional industries such as manufacturing and not because of a rise in domestic consumption.
Production and exports rose in China for face masks and medical protective gear. This increased China’s exports by 3.6 percent (in US dollar-terms) in 2020.