HONG KONG: The OECD is projecting an uneven K-shaped economic recovery from the pandemic in 2021. Richer countries with more extensive vaccine rollouts that can afford to reopen and reflate their economies will do so. Poorer economies will struggle to stay healthy and avoid debt crises.
But the mantra that “no one is safe until everyone is” highlights the need to spread health, wealth, and self-respect to all. An increasingly prosperous China can and should play a central role in this effort.
Whereas the World Bank estimates that the pandemic may drive up to 150 million additional people globally below the poverty line of US$1.90 per day, billionaires everywhere have become richer during the crisis.
A 2020 report by UBS and PwC indicated that the global number of billionaires had increased to 2,189, with their combined wealth rising to US$10.2 trillion, mainly owing to higher returns on technology stocks.
CHINESE HOUSEHOLD WEALTH ON THE RISE
Meanwhile, Credit Suisse estimates that global household wealth stood at US$400 trillion in June 2020, a more than threefold increase from US$117.9 trillion at the end of 2000.
Chinese household wealth rose remarkably fast, from 3.2 per cent of the global total in 2000 to 17.7 per cent by mid-2020. Over the same period, the United States’ share dropped from 36.2 per cent to 29.4 per cent, and Europe’s from 29.3 per cent to 25.2 per cent, while India’s rose from 1.1 per cent to 3.5 per cent.
But the benefits of rising wealth have not been equally shared, as almost all countries’ Gini coefficient – which measures inequality – has worsened.
Yet, while the number of Chinese billionaires has risen sharply due to property and tech booms, the gap between Chinese and US median wealth levels is narrowing. In 2000, the median wealth per Chinese adult was US$2,193, or 4.8 per cent of the US level, according to Credit Suisse.
By mid-2019, it had risen 9.5 times, to US$20,942, or 31.8 per cent of the American median of US$65,904.
Moreover, although Chinese per capita debt rose over those two decades, it was equal to only 21 per cent of median wealth in mid-2019.
In the US, by contrast, per capita debt amounted to 95 per cent of Americans’ median wealth in mid-2019, up from 76 per cent in mid-2000. This faster debt increase slowed the rise in median Americans’ net wealth.