China: We must narrow income gap

The yawning gulf between China’s rich and poor has been officially revealed as the Government says it urgently needs to narrow the politically explosive gap.

Beijing failed to report the widely used Gini coefficient for income distribution for 12 years as complaints grew about the widening income gap mounted during China’s fastest growth on record.

That prompted suggestions the ruling Communist Party might be trying to downplay the gap between an elite who benefited from more than three decades of reform and the poor majority.

China’s Gini coefficient was 0.474 last year on a 0-to-1 scale, down from a high of 0.491 in 2008, said the director of the National Bureau of Statistics, Ma Jiantang. That would make China among the world’s most unequal societies. By comparison, Ma said Brazil’s Gini number was 0.55, Argentina’s 0.46 and Russia’s 0.40.

“We must focus on income distribution,” Mr Ma said at a news conference. “On the one hand, we need to make the cake bigger, while on the other, we need to do a better job of sharing it.”

Narrowing the income gap is a pressing issue for new Communist Party leaders who took power in October. The government is rumoured to be preparing to release a long-range plan to reduce inequality but there has been no official confirmation.

The latest announcement follows two years of improvement in income distribution that Mr Ma said was due to higher social spending and government efforts to improve life for the poor. Private-sector economists say, however, that much of the rise in income for China’s poorest is due to wage rises prompted by labour shortages.

China’s boom has made multibillion-dollar fortunes for some entrepreneurs but income growth for the majority has been sluggish. Complaints about the lavish lifestyles of officials, Communist Party figures and military officers who drive luxury cars, own villas and send their children to elite foreign universities have fuelled political tensions.

The government last issued a Gini number for 2000. Since then, Mr Ma’s agency has said it knew too little about incomes of wealthy households to do a calculation. The government announced a national survey last February to gather income data for a new calculation.

The Gini figure is based on how much of a country’s income goes to each economic level of society. The index ranges from zero for complete equality to one for perfect inequality. It also can be reported on a 100-point scale.

An economist, Xu Xiaonian, ridiculed the latest poverty measure as “fake data” in a post on his microblog, reflecting widespread scepticism about the reliability of official information.

“The Gini number, even an author of fairy tales wouldn’t dare write this,” Mr Xu wrote.

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