Country's wealth divide past warning level

By Chen Jia (China Daily)
Updated: 2010-05-12 07:13
Large Medium Small

BEIJING - The Gini coefficient - a commonly used measure of inequality of wealth - has reached 0.47 in China, overtaking the recognized warning level of 0.4, government-affiliated experts have said.

"The Gini coefficient in China has been continuously rising after it reached the alarming 0.4-level 10 years ago," Chang Xiuze, a researcher with the academy of microeconomic research under the National Development and Reform Commission, was quoted as saying in the Economic Information Daily on Monday.

The brainchild of Italian statistician Corrado Gini, the Gini coefficient, which is a measure of statistical dispersion, is commonly used as a measure of inequality of income or wealth.

Related readings:
Country's wealth divide past warning level Getting the lowdown on development
Country's wealth divide past warning level Bridging the income gap
Country's wealth divide past warning level Individual income tax threshold to remain: MOF
Country's wealth divide past warning level Bridging income gap vital

A low Gini coefficient indicates more equal distribution, with 0 corresponding to complete equality, while higher Gini coefficients indicate more unequal distribution, with 1 corresponding to complete inequality.

"The gap between the rich and poor has become unreasonable," Chang said.

Li Shi, a professor on income distribution and poverty studies with the Beijing Normal University, said the income of the top 10 percent of the richest Chinese was 23 times that of the bottom 10 percent in the country in 2007, as compared with 1998, when the gap was only 7.3 times.

Some economists believe the widening wealth gap is partly the result of large amounts of "illegal income" resulting from corruption.

According to a 2007 survey conducted by Wang Xiaolu, deputy director of the national economic research institute under the China Reform Foundation, about 4.8 trillion yuan ($703 billion) of urban income evaded tax and was referred to as "hidden income", the Economic Information Daily report said.

About 75 percent of the "hidden income" belonged to the high-income category, according to the survey, which covered more than 2,000 urban families across the country.

Experts also noted the unreasonable high incomes in "monopoly trades of electronic information, oil, finance and tobacco" and "profiteering trades of real estate, coalmine exploration and securities".

"The income of senior executives in some State-owned enterprises is about 128 times of the average social income," Su Nanhai, director of the labor and wage institute under the Ministry of Human Resources and Social Security, was quoted as saying.

"The gap is about 18:1 between senior managers and common workers in the same listed State-owned enterprises," Su said.

Wei Jie, a professor with Tsinghua University, said monopoly trades should not dominate income distribution.

"It is sad that smart and hardworking people cannot have high incomes if they work in non-monopolized trades," he said.