“Gray income” is underreported or unreported income. According to this Century Weekly editorial, “gray income” masks an even deeper income disparity in China than the one previously understood:

China’s longtime debate over so-called gray income is in the public spotlight again thanks to a new study by Wang Xiaolu, deputy director of the National Economic Research Institute at the China Reform Foundation.

The study focused on unreported income among mainland households and, based on years of quantitative analysis, concluded that per capita income for the wealthiest 10 percent was 65 times that of the poorest 10 percent in 2008.

In other words, the true wealth gap in China is more than twice the official disparity rate. Total gray income in 2008, according to Wang’s study, reached a stratospheric 5.4 trillion yuan.