CHINA ALREADY FINANCE CAPITAL OF THE WORLD
Economic capital is an important resource of every country, but other factors are also important: the ease with which individuals or associated entities can accumulate property, as well as the perception of the country as stable and trustworthy among potential investors.
Investigating the myriad of economic indicators will be part of our League of Nations 2021 project.
The results of the economic capital league (which includes the size of the GDP of a given country, an average rating and the number of wealthy people living in each country) differ significantly from the results of the overall League of Nations.
In terms of capital, it is China that holds the top spot in the world, receiving 16.8 points. The US is second (13.6 points), India third (6.1 points).
You can see how capital has both been created and invested in China since 1991, how the USA has consistently lost economic power to 2018 and how the largest European capital markets – UK and France – have made little comparative progress amid these titans.
In 1991-2016, China made the biggest gains in terms of its capital—its economic indicator rose by a massive 12.9 points. Meanwhile, the measure for the US fell by 5.8 points. The last few years were crucial in this category, when “new money” began to appear in China, along with new millionaires climbing up the lists of the richest people. Even back in 2015, the US was able to count on an economic potential of 15.8 points and China of 15.2. In the coming years, China’s potential will rise rapidly.
The other country that also reported large gains was India—3.7 points.
Interestingly, if the EU were a more cohesive unit, it would have the biggest capital in the world—18.2 points. But today the problem of a unifying Europe is its falling share of the world capital. In 1991, only 12 countries were members of the EU, but if they were considered as a monolith, their economic potential would have been worth 23.2 points, a better result than the US (19.5 points) and China, whose economic weight at the time (3.8 points) was then smaller than Japan’s economic weight today.
The share of the world’s riches also rose among countries such as Indonesia, Iraq, Turkey, Nigeria, Qatar and Vietnam.
At the other end of the ledger the poorest countries in the world are North Korea (last place at 1.68), Micronesia, Comoro Islands, Antigua and Barbados and Guinea-Bissau.
But what about personal wealth?
As more wealth is created in the world, more of it is concentrated among the richest people in the richest countries. The combined gross domestic product of countries for which there is data adds up to $116.7 trillion. Nearly $93 trillion of that wealth is concentrated among just 25 countries.
Yet some nations on this list rely almost exclusively on one product to fuel their economies. Some smaller countries that do not have a wide variety of industries still rank among the wealthiest nations in the world because they are among the countries that control the world’s oil.
The wealthiest countries also tend to be the healthiest. The world average life expectancy at birth is 72.2 years, yet in each of the world’s 25 richest countries, the average life expectancy is at least several years, if not a full decade, longer. Some of the richest nations also rank among the healthiest countries in the world.
The decision by China to focus its political energy on beating the United States in terms of access to, and distribution of, capital has paid off handsomely. The 2010’s saw an exponential rise in China’s wealth, surpassing the United States in 2015. However, China remains behind the United States in key powerapps, not least military and diplomatic power. If China now employs a smart power strategy to close the remaining gaps when will the Middle Kingdom achieve top of the league status?
That is our final question tomorrow before we declare our winner.
*You can see more details with our friends the State Power Index