China's inequality index highlights urgency for distribution reforms

Source:Xinhua Published: 2013-1-20 11:49:36

China's first release of a rich-poor index for the past decade paints a far-from-rosy picture of what the country needs to do to bridge the wealth gap and make more people included in its magnificent growth story.

Ma Jiantang, director of the National Bureau of Statistics (NBS), told a press conference here on Friday that the Gini coefficient reached 0.474 in China in 2012, higher than the warning level of 0.4 set by the United Nations.

The index has retreated gradually since peaking at 0.491 in 2008, dropping to 0.49 in 2009, 0.481 in 2010 and 0.477 in 2011, Ma said, citing NBS calculations.

The latest release marked the first time China announced an official broad-based Gini coefficient since 2000, when the government put the index at 0.412 for the year.

"The statistics highlighted the urgency for our country to speed up the income distribution reforms to narrow the gap," Ma said. FIRST OFFICIAL RELEASE SINCE 2000

Although experts and the public had called for the authority to unveil the index for the entire country in the past, the NBS had only released the Gini coefficient for rural residents due to a lack of unified survey standards in rural and urban areas.

"In the past two years, we have revised the earlier survey methods that separated rural and urban residents," Ma said.

Last December, the NBS adopted unified statistical standards and indicators for collecting data from urban and rural residents, and it calculated the latest Gini coefficient based on a survey of about 400,000 households, Ma said.

According to the new standards, the bureau also adjusted historical data and came up with the Gini coefficients for 2003 to 2011, Ma added.

Liu Yuanchun, an economist with Renmin University of China, said the results from the NBS are close to past World Bank data, which recorded China's 2008 Gini coefficient at 0.474.

At the conference, Ma also offered comparison data for several other countries -- Argentina at 0.46 in 2009, Mexico at 4.48 in 2008, and India at 0.33 in 2005. PRESS FOR MORE ACTIONS

The recent release of the inequality data for the world's second largest economy echoed the fact that an increasing number of Chinese people have become more vocal in recent years to demand for fairer distributions of incomes and opportunities, thanks in part to the penetration of the social media platforms such as the Twitter-like Weibo.

Besides the unfair distribution of education, employment and public services amid the country's urbanization initiatives, rent-seeking corruption has become a major culprit behind the yawning gap.

Aware of the implications of the gap, China has vowed to double the country's 2010 gross domestic output (GDP) and per capita income for both urban and rural residents by 2020.

Ma said given the relatively high level of Gini coefficient during the past decade, China should make endeavors to "better distribute the cake" of China's economic growth while trying to make it bigger.

He said China needs to put more focus on handling the relations between market and efficiency, as well as development and distribution.

Bai Jingming, deputy director of the Research Institute for Fiscal Science, said the official release of the Gini coefficient by the NBS provides an objective statistical account for evaluating the complicated social issue, and it will serve as a foundation for the government's policymaking. COMBINED MEASURES

Fiscal and taxation policies will continue to play an important role in adjusting income distribution, according to Bai.

The country has reformed the personal income tax system and encouraged economic development in the central and western regions to benefit local residents, Bai said.

By boosting central expenditure on social security initiatives, such as offering employment training in some areas, the government is also helping residents to refine their abilities and increase their earnings, Bai added.

To reduce the disparity between urban and rural areas, the government has beefed up investment to support agricultural development, improve rural infrastructure and expand the social security network

Rural residents' income outpaced that of their urban peers for a third consecutive year in 2012, according to NBS data released Friday.

The per capita disposable income of urban residents increased 9.6 percent in 2012 after being adjusted for inflation, while the per capita net income of rural residents climbed 10.7 percent.

Meanwhile, China's long anticipated income distribution reform, which has been in the making since 2004 and is still yet to come, has been widely counted on to address the issue in a more systematic way.

But the timetable of the release of the plan is yet to be announced, with many citing resistance from the monopolized sectors as major obstacles.

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