Beijing: As China’s economy first opened up to market-based reform, Deng Xiaoping famously suggested that some naturally, particularly through hard work, “should be allowed to get rich before others”.
Many in China have, but the ‘others’ have increasingly lagged behind.
Wealth inequality has long become one of the most politically sensitive issues in China – seen by the people as a direct outcome of flagrant corruption.
Early last year, as President Xi Jinping assumed power, the government broke a long-standing taboo – it reported its official Gini coefficient for the first time in more than a decade.
A widely-used measure of inequality, a Gini coefficient of zero means perfect equality; a score of 1.0 means one person holds all the wealth.
China scored 0.474 for income inequality. While official Chinese figures are often viewed with scepticism from observers, the declaration was seen as another attempt to portray the legitimacy of the party's anti-corruption drive.
On Friday, the country’s top tertiary institution, Peking University, released what it says is the first comprehensive measure of wealth inequality.
The surprise was perhaps not so much in the findings that China’s top 1 per cent hold more than one-third of the nation’s wealth, or that the bottom 25 per cent held just 1 per cent of the country’s wealth, but that the sensitive figures was allowed to be widely reported across all of China’s official state media outlets.
“I’m amazed how many people are interested in our study,” Yu Xie, a visiting professor at Peking University and a co-author of the report, told Fairfax Media. “There is a lot of public attention to this and so it seems there’s a lot of political attention to this. So it is sensitive in that sense."
The report scored China’s Gini coefficient for wealth – not to be confused with the more common measure for income – as 0.73. It is a very high reading representative of severe wealth inequality in China, but it is below, for example, the United States’ figure of 0.80. Australia’s Gini coefficient for wealth is 0.622.
"The property inequality as well as the relative economic inequality has become a social problem that cannot be ignored. This is the root of many social issues and may result in a vicious cycle where the rich get richer while the poor get poorer," said Professor Xiein quotes carried by numerous major local media outlets.
But China’s Gini coefficient for wealth, according to the Peking University study, has rocketed to today’s figure from 0.45 in 1995 and 0.55 in 2002.
Professor Xie, a leading Chinese-born American sociologist usually based at the University of Michigan, says much of the increase has come from a surge in house prices – another major social problem in China.
Civil servants, who are assigned housing from their work units, have benefited more, and accumulated more wealth, than those who have worked in the private sector.
And like in the US, China’s wealth inequality stood to widen as its economy matures, and wealth accumulates within households over time.
“The fu’erdai, the new rich in China, are able to inherit a substantial amount of wealth,” he said. “That’s new and that’s important.”
