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Economic inequality in China is larger than in the U.S.

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Posted November 24, 2014

Economic contrasts have reached enormously high level in China, country ruled by communist government. In fact, economic gap between rich and poor is even larger than in the United States of America. “Our results indicate that a substantial part of China’s high income inequality is due to regional disparities and the rural-urban gap,” the authors of the study published in the Proceeding of the National Academy of Sciences claim.

Picture: China festival of lights, dragon. Image credit: Alias 0591 via Flickr, CC BY 2.0.

Picture: China festival of lights, dragon. Image credit: Alias 0591 via Flickr, CC BY 2.0.

It is well-known that since the transformation to capitalist economic system, income inequality increased rapidly in China. Nationally representative public surveys show that this trend is perceived as one of the major social problems in this country. However, it is difficult to estimate the real level of disparity, because this question is highly politicized.

“In the case of income inequality, the National Bureau of Statistics stopped releasing the Gini coefficient after it reached 0.41 in 2000. It was not until an economist claimed that the Gini coefficient had reached the shockingly high level of 0.61 that the NBS, in early 2013, released the Gini coefficients for recent years, which were slightly under 0.5,” the researchers say. Moreover, micro-level data are not available to independent researchers.

However, these issues are still explored by Chinese researchers working in exile. Distinguished Sociology Professor at the University of Michigan Yu Xie and his colleague Xiang Zhou attempted to find out what is the real state of affairs in present-day China and what are the main causes of it.

“For our main analyses throughout this paper, we focus on the 2010 baseline survey of the China Family Panel Studies (CFPS). The 2010 survey of the CFPS is the baseline wave of a large-scale, almost nationally representative panel survey project conducted by the Institute of Social Science Survey at Peking University,” the scientists explain.

Researchers discovered that Gini coefficient calculated using non-governmental data is much higher than 0.5. Although high income disparities existed even before transition to capitalism, disparities have become considerably larger since then. These nation-wide divergences can be explained by two main structural factors. Large differences between different regions and between urban and rural populations prevail. Ironically, this process is reinforced by communist party which prefers city-inhabitants over people living in rural areas.

Article: Xie Yu and Zhou Xiang, 2014, Income inequality in today’s China, Proceeding of the National Academy of Sciences of United States of America, source link.

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