For the first time ever, there are more ultra-wealthy people in China than the US - and America's growing wealth gap may be partially to blame
- In 2018, China was home to more members of the global top 10% than the United States for the first time in history, according to a new report by Credit Suisse.
- The global top 10% have net worths above $109,400 and own 82% of the world's wealth, Credit Suisse found.
- Three factors affect how many millionaires live in any given country: The size of a country's adult population, average wealth, and levels of wealth inequality, according to Credit Suisse.
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In 2018, for the first time in history, more of the world's wealthiest people lived in China than the United States.
Out of the hundreds of millions of people that make up the wealthiest 10% of people on the planet in 2018, 100 million lived in China and 99 million lived in the United States, according to Credit Suisse's Global wealth report 2019.The global top 10% have net worths above $109,400, Credit Suisse found. That group owns 82% of the world's wealth.
"Wealth in China started the century from a lower base, but grew at a much faster pace during the early years," Credit Suisse said in the report. "It was one of the few countries to avoid the impact of the global financial crisis. China's progress has enabled it to replace Europe as the principal source of global wealth growth and to replace Japan as the country with the second-largest number of millionaires."
Despite overtaking the United States as home to the most members of the top 10%, the overall growth of China's ultra-wealthy class stalled in 2018, according to Credit Suisse. Tariffs and declining exports slowed China's overall economic growth last year, Credit Suisse reported. China also has a substantially larger population than the United States - 1,384,688,986 in 2018 compared to the United States' 329,256,465.
The United States is still home to the largest share of millionaires of any country. Credit Suisse found that 40% of the world's millionaires - some 18.6 million are American - compared to China's 4.4 million.
The United States' wealth gap is growing
As Credit Suisse outlines, there are three factors that affect how many millionaires a country has: The size of a country's adult population; average wealth; and levels of wealth inequality.In the US, the latter of those three metrics is particularly pronounced when compared to China.
The top 1% of Americans now own 40% of the country's wealth, the University of California at Berkeley's Gabriel Zucman wrote in a paper circulated by the National Bureau of Economic Research in February. China, on the other hand, has relatively low - but rising - levels of inequality, due to the lack of old money and equal land division, according to Credit Suisse.
America's widening wealth gap won't just affect its number of wealthy citizens - it could have detrimental impacts on the nation's economy, Business Insider previously reported. An August report by consulting firm McKinsey & Company found that the concentration of wealth among America's highest earners could cost the economy between $1 trillion and $1.5 trillion between 2019 and 2028.
A wealth tax has been proposed as a potential solution by presidential candidates and billionaires alike. One of the most frequently cited proposals, Sen. Elizabeth Warren's "Ultra-Millionaire Tax," calls for a 2% annual tax on households with a net worth between $50 million and $1 billion, and a 3% annual tax on households with a net worth over $1 billion.