Communist China has very high level of income inequality
Communist China has one of the world’s highest levels of income inequality, with the richest 1% of households owning a third of the country’s wealth, a study produced by Peking University has found.
The study reported by Chinese media this week is based on the China Family Panel Studies (CFPS), which sampled 14,960 families from 25 provinces and cities to identify the Gini Coefficient in China, an important indicator for wealth inequality.
The World Bank says that the coefficient varies between 0, which reflects complete equality and 1, which indicates complete inequality (one person has all the income or consumption, all others have none).
The World Bank has a rate of 0.325 for Ireland; Denmark 0.291; Sweden 0.273; Germany 0.301; UK 0.326; US 0.411; Brazil 0.529 and Chile 0.505.
China's rate in 2012 was at 0.490 — the World Bank views a rate above 0.400 as representing severe inequality.
In addition to income and wealth disparity, education opportunities and healthcare are also appallingly different for both the haves and have-nots.
Hukou, or the household registration system, the educational background of one's parents, membership in the Communist Party of China (CPC) as well as one's birthplace count ever more in seeking educational resources than they did in the past 30 years, the report noted.
Medical security, which should have served as a counterbalance for the yawning income gap, turns out to be sensitive to wealth as high-income earners enjoy more subsidies than low-income earners, said Li Jianxin, chief author of the report and a professor at Peking University.
Prof Li warned of the growing social instability and potential bottleneck in China's development which could result from the inequalities between different social structures, different social classes and regions.
The Financial Times says that while China’s income inequality is more severe than other large countries, wealth inequality is worse in the US. The wealthiest 1% of US households owned 42% of all US wealth in 2012, according to research led by Emmanuel Saez, economist at University of California Berkeley.
The FT says rampant corruption and unreported income presents challenges for estimating income and wealth levels in China.
The newspaper also reports that the Hurun Report said on Thursday that the number of dollar millionaires in China had risen 8% over the past year to 3.14m. According to Hurun’s 2015 China Rich List, the country is home to 596 dollar billionaires, more than the US.
Image above: CKGSB KNOWLEDGE — Cheung Kong Graduate School of Business (CKGSB)