Beijing's release of wealth divide data gets mixed reception

Praise and scepticism greet Beijing's figures on wealth disparity, which is above UN alarm level

PUBLISHED : Sunday, 20 January, 2013, 12:00am
UPDATED : Sunday, 20 January, 2013, 3:35am

The central government's decision to release a key measure of income inequality has been welcomed, with analysts describing it as a good first step by the new leadership to deal with arguably the country's most explosive political issue.

But the praise was tempered with criticism that the way the wealth distribution data was being released appeared to play down the severity of the problem.

On Friday, the government officially acknowledged for the first time in 12 years the size of the gulf between China's rich and poor, saying the country's Gini coefficient was 0.474 last year, well above the 0.4 warning level set by the UN.

Under the scale, zero represents perfect equality, meaning everyone has equal wealth, and one represents perfect inequality, meaning one person has all.

The National Bureau of Statistics (NBS) last released the figure in 2000, when it hit 0.412, but it said the Gini index had decreased every year since 2008, when it peaked at 0.491.

The publication of the data comes two months after Xi Jinping and Li Keqiang ascended to the top two spots in the ruling Communist Party. They are set to take over in March as president and premier, respectively, completing a once-in-a-decade power change.

"I believe it is a first step that reflects the new leadership's more open approach and its desire to promote transparency," said Ma Guoxian , director of Shanghai University of Finance and Economics' Public Policy Centre.

The NBS also said the growth in household income outpaced the rest of the economy, meaning a rising share of wealth is going into consumers' pockets. The disposable income of urban residents increased 12.6 per cent last year, while that of rural residents grew up 13.5 per cent, outpaced the 7.8 per cent in same period.

However, some economists were critical, deriding the numbers as a political concoction.

"The income gap is far more serious than the official data suggests which, I believe, is politically motivated to downplay the social conflict," said Yi Xianrong , an outspoken economist with the Chinese Academy of Social Sciences.

Recent independent studies have suggested the country's income gap was much worse. Texas A&M University economics professor Gan Li put China's Gini coefficient at 0.61 in 2010 - which would place it among the most unequal in the world.

A survey last month by a research centre founded by the Southwestern University of Finance and Economics and the Institute of Financial Research, an affiliate to the People's Bank of China, came up with a similar number.

"This release is an effort … to downplay the gap between the elites, who benefited from more than three decades of reform, and the poor majority," Yi said.

Ma said the release was meant to lay the ground for a long-awaited reform to income-distribution policies. Such an overhaul has been promised since 2004, but has stalled in the face of resistance from interest groups and state-sector monopolies.

"I would think reforms to narrow the widening income gap would top the new leadership's political and economic agenda," Ma said.