Government Proposal Aims to Narrow Economic Divide

Last month, the Chinese government made the country’s official gini coefficient public for the first time since 2000. The official number, which measures the level of economic inequality in a society on a scale of 0 to 1, was a moderate .474 in 2012. However, other surveys have found China’s gini coefficient to be at a more alarming level of .61. Now, many are questioning the accuracy of the official numbers, largely because of corruption which masks income at the highest levels. From Caixin:

The NBS says the annual disposable income of the richest 10 percent of urban residents was 43,000 yuan in 2008, much lower than my research result of 139,000 yuan. The number in 2011 was 59,000 yuan, which hardly explains what we see today – high housing price in cities, rapidly expanding private car ownership, a total of 35 trillion yuan in private bank deposits, the flow of private funds overseas and the zeal for luxury goods shown by Chinese traveling abroad.
Bureau head Ma Jiantang said that “we feel that our urban Gini coefficient reading based on a survey of urban residents is too low. The main reason is it’s hard to access the true figure for the high-income group.”
The problem is two-fold. Many high-income residents do not want to take the survey, and the NBS cannot guarantee that their substitutes have the same level of income, a situation that eventually causes part of the high-income group to be omitted. And those high-income survey-takers do not necessarily provide a full picture, especially when they have significant grey income, or income from extralegal sources. Therefore, the result based on reported income is lower than reality.
Gaps in income between the highest and lowest levels of Chinese society has been a source of social unrest for many

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One Response to Government Proposal Aims to Narrow Economic Divide

  1. Javed Mir says:

    –under Xi Jinping has also promised to expand state spending on health care, education and social welfare –

    So state intervention is still a reality in China. Capitalism has its virtues and also some drawbacks that directly results in income inequality — to be harmonised by state control.