Executive Briefings

Income Gap in China Is Much Wider Than Many Realize

China already is showing levels of inequality comparable to the Philippines and Russia and is far less egalitarian than Japan, the U.S., and even Eastern Europe, according to Li Shi, an authority on income distribution trends at Beijing Normal University. Official figures show rural incomes are less than one-third those in cities, with the top 10 percent of urban Chinese earning about 23 times that of the poorest 10 percent-a ratio that is almost certainly understated, according to Li. "You can find increasing income inequality almost everywhere in China today," he says.

One reason is a system that blocks an estimated 150 million or more rural migrant workers from gaining access to benefits such as health care, education and pensions available to urban residents. As a result, migrants are forced to save more of their wages to cover medical expenses and their retirements, says Li. Their incomes are also getting pinched by higher food prices (inflation is hovering around 5 percent) and rising housing prices (up 6.4 percent in December on an annual basis).

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China already is showing levels of inequality comparable to the Philippines and Russia and is far less egalitarian than Japan, the U.S., and even Eastern Europe, according to Li Shi, an authority on income distribution trends at Beijing Normal University. Official figures show rural incomes are less than one-third those in cities, with the top 10 percent of urban Chinese earning about 23 times that of the poorest 10 percent-a ratio that is almost certainly understated, according to Li. "You can find increasing income inequality almost everywhere in China today," he says.

One reason is a system that blocks an estimated 150 million or more rural migrant workers from gaining access to benefits such as health care, education and pensions available to urban residents. As a result, migrants are forced to save more of their wages to cover medical expenses and their retirements, says Li. Their incomes are also getting pinched by higher food prices (inflation is hovering around 5 percent) and rising housing prices (up 6.4 percent in December on an annual basis).

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