Dec 10, 2012 03:44 PM

China's Gini Index at 0.61, University Report Says

(Beijing) – China's Gini coefficient has reached a shockingly high level as its wealth gap grows, a recent academic report said, calling attention to the equality indicator that the government has not tracked for years. 

The coefficient was 0.61 for 2010, the report by the Chinese Household Finance Survey Center of Chengdu's Southwestern University of Finance and Economics said. The report was released on December 9.

There is no official data for comparison, but the coefficient of all countries monitored by the World Bank averaged 0.44 for 2010.

The Gini coefficient measures the wealth gap on a scale of 0 to 1. The higher the figure, the greater the inequality. A reading above 0.4 usually marks strong inequality. 

China's figure was globally rare, the report says. However, it added that it is natural for a fast-developing economy to score high.

According to the report, the combined income of all households in eastern provinces was about 2.7 times that of the west and the central regions.

Earlier this year, the center's research showed that 10 percent of Chinese households held up to 57 percent of all disposable income.

Regionally, the report said, the index was higher in places with stronger market competition. The Gini figure for households in eastern provinces was higher than the figures for central and western regions. 

The perceived high incomes of employees at state-owned enterprises (SOEs) did not have a significant impact on the coefficient, the report said, because a recalculation of the index without civil servants and employees of SOEs yielded similar results. 

Pension incomes explained a lot of inequality between urban and suburban household incomes, the report said. In 2010, only 34.5 percent of the rural population was covered by state-sponsored old age insurance schemes and they received only 12,000 yuan every year. The figures for cities were 87 percent and 33,000 yuan per year.

Strengthening subsidies to low-income households could reduce the disparity in the short term, the report suggests. The central government has at its disposal about 3.8 trillion yuan from last year's fiscal revenue and SOEs' retained profits. If it uses the money to subsidize the poorest households, it could lower the Gini coefficient to 0.4 over several years, the report argues.

The National Bureau of Statistics stopped releasing Gini coefficient since 2001, saying that income data for wealthy households was incomplete.

The latest data the bureau published was 0.412 for 2000. Last year, it said 2010's Gini index was slightly higher than in 2000, but did not reveal the figure.

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