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Gray income report sparks controversy

By Qian Yanfeng (China Daily)
Updated: 2010-08-27 09:59
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SHANGHAI - A report on China's widening income gap and a potentially high level of unreported income earned by the rich has come under fire.

The report, entitled Gray Income and National Income Distribution, suggested China's "gray income" reached 5.4 trillion yuan ($794 billion) in 2008.

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Officials from the National Bureau of Statistics (NBS) said on Wednesday that the figures in the report, which was published by an independent group in July, were unreliable.

"There are many flaws in the report, such as how the samples were chosen and calculations made, and the final result is significantly higher (than the actual level)," said Shi Faqi, an official with the NBS, in an article on the bureau's website.

Shi's article was commenting on a report by Wang Xiaolu, deputy director of the National Economic Research Institute affiliated with the China Reform Foundation, a Beijing-based economic development research group.

That report claimed China's average urban household income was 90 percent higher than official data, which it claims does not cover gray income such as kickbacks and bribes.

He said such gray income, amounting to 5.4 trillion yuan in 2008, was mostly earned by those who already have high incomes.

Wang also suggested that the discrepancy means China's gross domestic product (GDP) could be higher, its income gap wider, and the proportion of national income earned by laborers even lower than reported.

In fact, Wang's study on gray income from 2005 to 2008 showed that the growth of such income in China was faster than that of the GDP, with the rich getting most of it.

The survey that led to Wang's report covered only 4,909 households, about 7.6 percent of that investigated by the NBS survey, and thus the results based on the survey were not reliable, Shi said.

Furthermore, the households in the report were picked by researchers, instead of by random sampling, which was likely to cause serious deviations, Shi said.

Additionally, the report developed mathematical models to process variables such as consumer prices, residents' dietary habits and educational backgrounds, which had significantly overestimated the level of China's household earnings, he noted.

According to calculations using the model, the country's per capita disposable income in cities topped 32,000 yuan in 2008, double the NBS figure, while total urban incomes would account for nearly 74 percent of China's GDP.

"Such results are apparently not reasonable," Shi said.