(ConservativeInsider.org) – For decades, economists have used gross domestic product (GDP) to assess the financial health of nations. However, there are always multiple ways to paint such a picture. Financial advising group McKinsey & Company switched things up a bit by using a balance sheet, rather than GDP, to measure the world’s wealth. The results showed that some people could actually consider China, rather than the US, the richest nation in the world.
On Monday, November 15, The McKinsey Global Institute released a report titled, “The rise and rise of the global balance sheet.” It outlined that in recent years, contributors to wealth have shifted from hard goods to intangible items, like software and intellectual property. Additionally, real estate now makes up two-thirds of global net worth.
Using a balance sheet, rather than GDP, to assess wealth shows that China’s net worth hit $120 trillion in 2020 compared to the United States’ $90 trillion net worth last year. When looking at GDP, the US still far outpaces China with $21 trillion in comparison to the Asian nation’s $14 trillion GDP.
The Blaze detailed more about the new way of calculating wealth on Twitter:
China overtakes US as richest nation in 'national balance sheet' study https://t.co/4OB6b0oonk
— TheBlaze (@theblaze) November 15, 2021
McKinsey noted that GDP cannot tell the whole financial story of a nation anymore, as financial assets and liabilities have greatly changed in the past 20 years. So, while America may still have the highest GDP, they cannot deny that China is simply quite rich.
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