China’s dirty little secret: its growing wealth gap
Income inequality worsened for the first time in five years, with the top 1 per cent owning a third of the country’s total wealth
China’s wealth gap has widened for the first time in five years, a fact Beijing chose not to mention in this year’s economic report.
The Gini coefficient, a gauge ranging between zero and one that measures income equality, increased slightly to 0.465 last year, from 0.462 in 2015, according to data released by the National Bureau of Statistics (NBS) this week.
A reading of zero would mean everyone’s income was equal, while a reading of one would indicate that all the income was going to one person.
The United Nations considers a Gini coefficient higher than 0.4 a sign of severe income inequality.
The most recent figure for the US was 0.479. In term of cities, Hong Kong recorded an all-time high of 0.539 last year, behind only New York at 0.551. But it is difficult to gauge the exact coefficient for the mainland, as income estimates are based on household surveys.
Beijing did not mention the Gini figure for 2016 in January when it delivered its annual report on the past year’s economic performance, breaking a long-standing tradition.
In January, NBS director Ning Jizhe said inequality worsened last year due to the slow growth in pension income for poor urban families.
Last year, urban residents had an average per capita income of 33,616 yuan (HK$38,658) – 2.72 times higher than that of people in rural areas. They had an average annual income of 12,363 yuan, according to official data.
Nationwide, the average per capita income was 23,821 yuan, an increase of 62.6 per cent from 2010, when Beijing set a goal of doubling incomes by 2020.
“Over the next four years, as long as residents’ incomes increase at an annual rate above 5.3 per cent, we can achieve the goal of doubled incomes,” the National Bureau of Statistics said in its report.
A study from Peking University last year found that the poorest 25 per cent of mainland households owned just 1 per cent of the country’s aggregate wealth, while the richest 1 per cent owned a third of the wealth.
“It’s apparent that the wealth is increasingly being accumulated by the rich, who are taking fat gains from capital markets,” Lin Caiyi, the chief economist for Guotai Junan Securities, said.