Beware of Wall Street Greed as China’s Wealth Overtakes America

Beijing’s global political influence is growing in proportion to its increased wealth
November 24, 2021 Updated: November 24, 2021

Commentary

A new McKinsey report finds that China’s wealth blew past that of America over the past 20 years. Wall Street is too busy lapping it up to care much for the resulting deterioration of our national security.

China has overtaken the United States in net worth, according to a new study. The study, by McKinsey & Co., found that China overtook the United States in the last two decades. From $7 trillion in 2000, one year prior to joining the World Trade Organization, China’s wealth grew exponentially to $120 trillion in 2020.

Much of this relative wealth increase was plowed into increasing property prices in China compared to the United States, whose wealth only grew to $90 trillion. China’s government revenues also increased as a result, with the regime putting exponentially increasing amounts into its military. The Chinese military is now so large that the Chinese Communist Party (CCP) is emboldened to make frequent military threats, or engage in military incursions, against U.S. allies.

The new study, which represents countries composing over 60 percent of world income, also found that while global wealth tripled during this period, it grew more concentrated into fewer hands. Over two-thirds of wealth in both China and the United States is held by the richest 10 percent of households. According to McKinsey, their share is increasing.

Massive wealth disparities that result are at the point of pushing ultra-high-net-worth individuals (UHNWIs) to a status that can sometimes be above the law, especially where the rule of law is weak such as China and its possessions.

On Nov. 15, Bloomberg reported that Jamie Dimon, the CEO of JPMorgan Chase & Co., obtained an exemption from strict COVID-19 lockdown measures in Hong Kong, even as the city is increasing lockdowns for the rest of what should be admitted are second- and third-class citizens and travellers.

Epoch Times Photo
A woman is seen leaving JP Morgan Chase & Company headquarters in New York, on Aug 14, 2013. JPMorgan is just one of the Wall Street banks that employ relatives of CCP officials to get business in China. (Emmanual Dunand/AFP/Getty Images)

“The city has this month ended quarantine exemptions for most groups, including senior bankers, listed company directors and consulate staff in a bid to open travel to mainland China,” according to Bloomberg. Not so for Mr. Dimon.

Travellers to Hong Kong are normally required to spend up to three weeks in quarantine when visiting the city, which is forcing almost 50 percent of asset managers and major international banks to contemplate vacating staff and functions from the city.

JPMorgan is an object lesson in the increasing revenues that Wall Street accrues from China. According to Bloomberg, JPMorgan’s revenue in Asia increased over 50 percent since 2016, with 90 percent of growth due to “Greater China.”

Between 2000 and 2020, China accounted for nearly one-third of the increase in global net worth, increasing by $113 trillion compared to an increase of $50 trillion by the United States. Germany and France each grew by $14 trillion. Britain, Canada, and Australia grew by $7 trillion each. Japan and Mexico grew by $3 trillion each, and Sweden by $2 trillion.

Total global net worth increased to $514 trillion from $156 trillion over the course of 2000 to 2020. Sixty-eight percent of this wealth is in real estate, according to McKinsey. Property prices are ballooning, according to the study, and asset prices are nearly 50 percent over their long-term mean compared to income.

According to Bloomberg, which reported on the study on Nov. 15, “That raises questions about the sustainability of the wealth boom.” Bloomberg noted that large increases in property prices could make homes unaffordable and increase risks of another financial crisis such as that in 2008 when the U.S. housing bubble burst.

“China could potentially run into similar trouble over the debt of property developers like China Evergrande Group,” according to Bloomberg.

In addition to the 35 percent of global wealth in land and 33 percent in buildings, according to the McKinsey report, 11 percent is held in infrastructure, 8 percent in inventories, another 8 percent in assets and intangibles, and 6 percent in machinery and equipment.

McKinsey argued that the world’s wealth should be redeployed from property to more productive investment that could expand global GDP, but warned against a collapse in asset prices that might erase up to a third of the world’s wealth.

The report is important for at least two reasons: first, global wealth is concentrating; and second, it is concentrating in China. This has reoriented Wall Street, along with its prodigious political influence in Washington, from its prior focus on the United States and Europe, toward Beijing, Shanghai, and Hong Kong—which are seen as the highest-growth markets for global wealth and institutional asset managers.

Because the CCP has forced itself into a gatekeeper role over China’s markets, and leverages them for its purposes in other ways, Beijing’s global influence grows in proportion to China’s ballooning wealth.

On Dimon’s visit to Hong Kong, which coincided with President Joe Biden’s summit with CCP leader Xi Jinping, the bank executive said he was “not swayed by geopolitical winds.”

Dimon apparently didn’t even mention China’s human rights and its ongoing genocide, or America’s deteriorating national security. None of that matters to Wall Street, relative to its focus on increasing profits.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.

Anders Corr
Anders Corr has a bachelor's/master's in political science from Yale University (2001) and a doctorate in government from Harvard University (2008). He is a principal at Corr Analytics Inc., publisher of the Journal of Political Risk, and has conducted extensive research in North America, Europe, and Asia. His latest books are “The Concentration of Power: Institutionalization, Hierarchy, and Hegemony” (2021) and “Great Powers, Grand Strategies: the New Game in the South China Sea" (2018).