Inequality, Unemployment Higher Than Expected

A new survey suggests that China’s Gini coefficient—a measure of inequality—is far higher than either other recent estimates or the 0.4 mark often said to represent potentially destabilising inequality. China has not published an official Gini coefficient since 2000, citing inadequate data. The study also found that unemployment stands at 8.05%, twice the official rate, among the urban population, and has almost doubled in the past year among migrant workers to 6%. From Bloomberg: The Gini coefficient, an index measuring income inequality, was 0.61 in 2010, based on a survey of 8,438 households by the Survey and Research Center for China Household Finance, a body set up by the Finance Research Institute of the People’s Bank of China and Southwestern University of Finance and Economics. The survey also estimated the urban jobless rate in July 2012 was 8.05 percent, almost double the official figure. […] “China’s wealth gap is so prevalent between regions, sectors, and urban and rural that it’s impossible to see a meaningful decline in the Gini coefficient in the short term,” Gan Li, director of the Chengdu-based center and a professor at Texas A&M University in College Station, Texas, said at a briefing in Beijing today. “Depending on market forces alone can’t resolve the gap and China must change the structure of income distribution and rely on massive fiscal transfers to narrow such a yawning disparity.” Higher fiscal revenue and a bigger share of state-owned enterprises’ profits could give the government about 3.8 trillion yuan ($610 billion) a year to spend on income redistribution, said Gan, who has a doctorate in economics from the University of California at Berkeley. In the long run “China needs to beef up funding for education and reduce inequality of opportunity to lower the income gap,” he said. Although higher than expected, ...
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