Dividing the pie "correctly"? Income inequality in China

 •  Filed under China, inequality

The Financial Times just published a story titled China income inequality among world’s worst:

China’s Gini coefficient for income, a widely used measure of inequality, was 0.49 in 2012, according to the report. The World Bank considers a coefficient above 0.40 to represent severe income inequality.

... China’s leadership has pledged to address inequality. “We want to continuously enlarge the pie, while also making sure we divide the pie correctly. Chinese society has long held the value of ‘Don’t worry about the amount, worry that all have the same amount’,” Xi Jinping wrote in People’s Daily, a government mouthpiece, in 2014.

This post collects a few resources on the subject:

As for the objective extent of income inequality (as captured by imperfect surveys), Paolo Mauro posted a chart from his paper earlier today.

Mauro shows that China has what look like "Latin American" levels of income inequality:

Citizens' preferences

  • Martin K. Whyte: Do Chinese citizens want the government to do more to promote equality? (Book chapter)

  • Martin K. Whyte: China needs justice, not equality (Foreign Affairs)

  • A 2013 Pew survey found that the gap between the rich and the poor was viewed as the third most important problem by Chinese citizens. Corruption and rising prices were the top two concerns. Air pollution was fourth.

  • In a 2015 survey, inequality was arguably the fourth most pressing concern for Chinese citizens, though the data for the 2nd through 8th issue are very close.

  • Pew reported in 2012: "Roughly half (48%) [of Chinese citizens] say the gap between rich and poor is a very serious problem, up from 41% four years ago (fully 87% consider it at least a moderately big problem)."

  • Polls of Chinese citizens (2003-14) related to government performance.

On mobility and fairness

Finally, in my 2014 paper in income inequality I have a figure that illustrates a certain cynicism in China about income mobility.

A clear majority of respondents (more than 70%!) believe that having family wealth is either "very important" or "essential" to get ahead:

Source: Zilinsky, Jan, Learning About Income Inequality: What is the Impact of Information on Perceptions of Fairness and Preferences for Redistribution? (2014); Data: ISSP

Countries with histories of nepotism and corruption are near the top of the chart as well. But China almost looks like a special case.

The survey took place before President Xi took office. So the data comes from the period prior to the anti-corruption drive. (Some examples of the intensity of the anti-corruption campaign are here and here.)