4.4 trillion yuan in grey income hidden from official eyes

As much as 4.4 trillion yuan of personal income in the mainland is not reflected in the official figure, suggesting that potential growth in consumer spending and the property and stock markets may be stronger than perceived.

Such so-called 'grey income', which is not part of salaries earned by urban residents, accounted for 24 per cent of the country's gross domestic product in 2005 and about 50 per cent of the 8.3 trillion yuan official income statistics, a survey by the National Economic Institute of the China Reform Foundation showed.

The survey also found a more polarised income gap, as the nation's highest-paid individuals, who made up 10 per cent of urban households, earned 53 times more than those at the bottom, well above the official figure of 21 times.

Annual per capita disposable income of the top earners was 97,000 yuan in 2005, three times higher than the official figure of less than 29,000 yuan.

'It indicates that there could be missing information in official statistics on high-income groups,' Wang Xiaolu, a deputy director of the institute, told the 21st Century Business Herald. 'The existence of grey income suggests a wider income gap.'

Rising household incomes in the mainland have been fuelling demand for consumer goods, property transactions and stock prices. The scale of the grey income may make it more difficult for the government to prevent the property and stock markets from overheating.

Liao Qun, the chief economist at Citic Ka Wah Bank, said mainlanders had been aware of grey income for a long time and although the amount cited by the survey was 'astonishing', it was in line with expectations.