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China's rich-poor divide

Luxury cars and expensive jewellery featured in the lavish wedding of Fujian tycoon Wu Ruibiao's daughter, photos of which were posted on the Internet. (PHOTO: SINA WEIBO)

Publication Date : 22-01-2013

 

New official data says income gap narrower, but analysts sceptical

 

A tycoon from coastal Fujian province shelled out 210 million yuan (US$33.45 million) as dowry alone for his daughter's lavish wedding, where 4,000 guests each received a 1,000 yuan red packet.

Farther south in Guangzhou city, a worker who failed to get his overdue wages sank into such despair that he blew himself up. He died while seven others were injured in the explosion.

The two news items late last week reflect the extremities of the rich-poor gap in China.

They made headlines amid brewing controversy over fresh official data showing that income inequality had declined over the past four years.

China's official Gini coefficient improved to 0.474 last year, from a peak of 0.491 in 2008, statistics bureau spokesman Ma Jiantang told a Beijing briefing last Friday.

The Gini coefficient is a widely used measure of income disparity, with a reading of zero representing perfect income equality and one marking complete inequality.

The data sparked scepticism among some analysts who questioned its accuracy.

As China Europe International Business School professor Xu Xiaonian wrote on his microblog account about the Gini coefficient: "To use the words of Zheng Yuanjie (a well-known children's story writer), 'no one would even dare to write a fairytale like that'."

Indeed, the figure of 0.474 looked almost too good to be true when placed alongside that from a study by the Southwest University of Finance and Economics in 2010.

It calculated a coefficient of 0.61. This is 50 per cent more than the 0.4 level deemed by the United Nations as a warning line above which social tensions spike.

Official calculations put the 2010 figure at 0.481, down from 0.49 in 2009. From 2010 to 2011, it fell further to 0.477.

But even the statistics bureau's own reports did not seem to tally.

In 2011, it stated that the "Gini coefficient is a little bit higher than that in 2010" without giving details, Chinese finance magazine Caixin wrote last Friday.

Economists such as Central Finance and Economics University professor Liu Heng say the disparity in findings by official and academic statisticians may have resulted from different calculation methods. One key data point missing from official calculations may be grey incomes.

According to National Economic Research Institute professor Wang Xiaolu, "there is, to a certain extent, a gap in the official statistics". "Part of high-income people's earnings may not be truthfully reflected in the survey data," he said.

In a 2010 report, he had estimated that Chinese people hid 9.3 trillion yuan worth of "invisible assets" - which are not reflected in official accounts - every year.

Beijing itself has acknowledged the difficulties of calculating the Gini coefficient accurately because of insufficient data.

Its latest update came only after an eight-year hiatus, given the widespread under-reporting of incomes.

A major culprit: corrupt officials. Many do not fully declare their assets, particularly property.

The discipline commission reportedly found that officials had been mass-selling luxury villas in 45 cities since late last year amid a clampdown on corruption.

Shanghai and Guangzhou saw the most units offloaded - 4,880 and 4,755 respectively.

Such news has riled ordinary folk like Zhen Xia, 40, who feels the huge gulf between the official Gini coefficient and the stark reality of her life.

"While my wages have risen a little, it's getting noticeably harder to cover my spending, be it on food, housing or other things," said the accountant from eastern Qingdao city. "Meanwhile, I see people with power getting richer so easily... I bitterly resent all this social unfairness."

Zhen is not alone. Last week, an outcry broke out after netizens exposed a party chief of a poor county in western Shaanxi province being chauffeured around in a Volkswagen Touareg.

Its estimated worth was 1.05 million yuan, or the combined annual incomes of more than 200 local farmers. Local officials later claimed that the car had been "borrowed from a private firm".

Beijing is under growing social pressure to shrink the income gap, say government researchers.

"A level of 0.3 to 0.35 is more reasonable... 0.45 is cause for concern and must be controlled," Professor Niu Wenyuan, an academic with a think-tank that advises the State Council or Cabinet, told state media Xinhua yesterday.

 

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