Study: Income inequality skyrockets in China, now among world’s highest

December 11, 2012

A bicycle repairman in Beijing eats his lunch as a nearby woman tends to a child. (FREDERIC J. BROWN/AFP/Getty Images)

The gap between the rich and the poor is widening rapidly in China, according to a new study from Southwestern University of Finance and Economics, a Chinese college located in the city of Chengdu. Income inequality is an increasingly important issue for China, where elites are growing conspicuously wealthy as the middle class finds itself stalled and frustrated.

The just-out study finds that China's Gini coefficient was, as of 2010, an alarmingly high 0.61. That would be up substantially from the CIA's 2009 estimate of 0.48 and the World Bank's 2005 number, 0.43. The Gini coefficient, though imperfect, is a widely cited tool for measuring the disparity between a country's rich and poor. The higher a country's number, the more unequal are its people.

Comparing this new measurement with past Gini studies suggests that China may now be one of the most economically unequal countries on Earth, and the most unequal outside of sub-Saharan Africa. Compared to World Bank data, China ranks as the world's fifth most unequal, tied with Botswana. It performs a little better alongside CIA data, which would rank China as the world's seventh most unequal, between Haiti and the Central African Republic. These comparisons are imperfect, since the Chinese university study may not have used the same measurements as the World Bank or CIA studies, but a rough way of demonstrating the severity of China's growing class problem.

Many Chinese families are finding their climb into the middle class stalled, or in some cases set back, by the combination of a slowing economy and rising costs of living. Simultaneously, growing access to information and online discussion are allowing Chinese an outlet to learn about – and fume over – stories of corruption and privilege among the government elite. Whether or not Chinese income inequality is really as bad as this new study suggests, the finding is consistent with a growing sense among Chinese citizens that the system is no longer helping them as much as it once was.

It's important to note, though, that income inequality often skyrockets in rapidly growing economies, as new wealth accumulates among the already-wealthy and already-powerful. China's economy is one of the largest and fastest-growing in economic history, so in some ways it is not shocking that inequality would also reach extreme highs. But the problem's foreseeability does not make it any less severe.

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Olga Khazan · December 11, 2012