China Releases New Data Suggesting Income Inequality Has Lessened

China’s rapid economic and industrial development has lifted much of its population out of poverty and into the middle class, sometimes far higher. But as a minority is adjusting to new, unprecedented wealth, much of China is still poor, generating class tensions and threatening the country’s social and economic stability.

Beijing’s National Bureau of Statistics has released its own estimation of the Gini coefficient for 2012, valuing it at 0.474. The Gini coefficient, named after the Italian statistician who devised it in the early 20th century, is a measure of income inequality on a scale from 0 to 1. The value 0 represents total equality, where the value of 1 represents total inequality.

The release of an official Gini figure adds a statistical fact to the widely discussed, and supposedly growing, wealth gap in China that can be compared to others. According to the NBS, the statistic will provide a gauge for the urgency of policies to balance the nation’s wealth distribution. The United Nations has marked .4 as a threshold of warning against inequality.

The number puts China on the same footing as the U.S., with a Gini coefficient of .48 in 2011, according to the U.S. Census Bureau, and makes it more equal than other major emerging markets like Brazil and South Africa, whose coefficients are 0.55 and 0.63 respectively.

Over the course of the past nine years, China has consistently had a Gini value above 0.4, peaking in 2008 at .491. According to the data from the NBS, the value has been consistently decreasing over the past five years.

However, many, including the NBS, agree that the coefficient may not reflect the reality of China’s income disparities. The NBS uses data analyzing household income that comes from occupational wages. This does not account for the widely recognized non-wage income that many wealthy people do not record as part of their salary earnings. Money earned through corruption or other illicit activities is in a grey zone that cannot be accurately incorporated in the Gini index. According to Capital Economics’ China Economic Update, a more accurate Gini value would be closer to 0.6, ranking China as one of the world’s most unequal societies, if such off-the-record gains were included.

However, the trend of a dropping coefficient is still representative of some improvement. According to Capital Economics’ report, “income gaps between urban and rural households and between rich and poor provinces have narrowed.”

Regardless of the reported figures, Chinese officials are hoping to close the income gap. According to the state-run Xinhua News Agency, a government report released after the 18^th Communist Party National Congress in November 2012 stated that China is striving to double the nation’s 2010 GDP and per capita income for both urban and rural residents by 2020.

Ma Jiantang, director of the NBS, was quoted by Xinhua News saying this still may not be enough, and calling for more effective measures to be taken: "The country should do a better job at income distribution and strive to make the incomes of low- and middle-income residents grow faster.”

Just 25 years ago, before its rapid development, China had Gini coefficient figures of 0.30, closer to the socialist ideals that the ruling Communist Party officially aims for and highlighting the high-speed growth that the nation has seen. 

Though statistics may be saying otherwise, income inequality is still very much an issue and is more visible than ever; China’s homeless beg for change outside million-dollar highrises, as Lamborghinis and Ferraris are parked next to beat-up bicycles in downtown Beijing.