China's wealth gap widening


Fresh data shows how China’s income gap is worsening, an issue new leader Xi Jinping has resolved to tackle.

While decades of strong economic growth have lifted hundreds of millions of Chinese off the poverty line, the country’s wealth gap has widened to the point where it is among the world’s most unequal nations.

China’s Gini coefficient, which is commonly used to gauge inequality in income or wealth, stood at 61 in 2010, according to a study by the Survey and Research Centre for China Household Finance.

The Gini coefficient measures the wealth gap on a scale of 0 to 100. A reading above 40 usually marks strong inequality in wealth and income.

The coefficient of all countries monitored by the World Bank averaged 44 for 2010. Ireland’s Gini coefficient in 2010 was 33.2, according to Eurostat, a sharply worse reading than in 2009, when it was 28.8.

The Gini data is extremely sensitive in China, and the government has not released an official figure since 2000, when it stood at 41.2.


Gan Li, chief researcher and a professor at the research centre, which is part of the Southwestern University of Finance and Economics in Chengdu, said the reading was “rare in the world” and the gap was wide in both urban and rural areas.

But he said the reading was not “dreadful” because a wide gap between rich and poor was common in a fast-developing country.

One option would be to raise the minimum wage, but that would also hurt employment, he said. “We hope the government could spend more on improving people’s social welfare,” said Mr Gan.

Research earlier this year from the think tank showed that 10 per cent of Chinese households held up to 57 per cent of all disposable income.

The domestic east-west divide was stark, too. The combined income of all households in eastern provinces was about 2.7 times that of the west and central regions.