Building A Real Rich Country

Yesterday’s poor might start resenting who steal their future, even without regretting the poverty of the past
China is less egalitarian and more affluent than it is officially acknowledged. The National Bureau of Statistics (NBS), often accused of miscalculation, if not propaganda, is not as modern as the country requires, but it has a big excuse: it elaborates only what is known, not the perception neither the reality at times. Independent organizations do better in this field, because people respond without fear of releasing information to the government which may eventually lead to additional taxes.
Income distribution is one example of underestimation ofsocial differences. Gini Coefficient, the widely used index to measure income distribution, ranks China in 33rd place, even more unequal than USA (41st).
Among other things, it confirms that the policy to dismantle the previous egalitarian paid off, i.e. it confirms the economic theory that high level of GDP growth goes always hand in hand with growing income disparity. Income disparity is however a worrisome problem. NSB states yearly per-capita income is 16,000 yuan. The richest 10% of the population enjoys 44,000 yaun each. This sum looks blatantly incoherent with socio-economic attitudes: feverish property market and increasing luxury consumption for example. How can so small money buy so much?
The last report published by the independent and well reputed National Economic Research Institute shows a more realistic picture. In China there are gigantic additional revenues, invisible to statisticians and tax collectors. This grey area grows quicker than the nation’s GDP. To add more concern, it has been discovered that two thirds of this money goes to the wealthiest 10 percent of families. It is additional income for the well-off people.
Consequently, the income gap between the richest and the poorest in the cities stands at 26 times, while official statistics show nine times. If rural and urban incomes are jointly taken into consideration, the ratio becomes 65 times (23 for NBS). The divide is getting too big to be tolerated. It goes beyond normal ingredients of fortune and competition. Its roots belong to illegal procedures. Corruption, misuse of public authority, access to confidential information is all sources of revenues. In a smaller scale, the same results are reached by illegal labor market practices and infringements of regulations.
Before the situation gives way to social unrest, Beijing is planning to adopt measures to prevent corruption and to redistribute national income with a more balanced taxation setting and a stronger welfare system. Time is running short, though. Yesterday’s poor might start resenting who steal their future, even without regretting the poverty of the past.