Data suggest that the level of wealth inequality in China has risen rapidly, and is now very high.
A Peking University study conducted in 2017 found that the poorest 25 percent of households owned just 1 percent of the country’s aggregate wealth. This stood in stark contrast with the richest 1 percent, who owned a third.
According to official data, in 2016, China’s Gini coefficient for income inequality, referring to the difference in citizens’ flow of money received, was 0.47, compared with an OECD average of about 0.316 in 2014. Another, earlier study revealed that, due to rising property prices, China’s Gini coefficient for wealth inequality shot up from 0.538 to 0.739 between 2002 and 2010. (On the Gini scale, 0 denotes a totally equal society, and 1 denotes a totally unequal one.)
About two-thirds of household wealth in China is made up of real estate, with the remaining one-third in financial and business assets. Capital generates return, so wealth inequality leads to inequality in capital income. If capital return continues to grow faster than labor income in the future as in the past, the wealth inequality of today will simply exacerbate future inequality in wealth and income.
According to the Ministry of Finance, the value of equity in enterprises that the Chinese state-owned or controlled in late 2017 was RMB 51.4 trillion (US$7.5 trillion). Taking into account the value of land and natural resources (all owned by the state), the Chinese government directly controls immense assets. The combination of enormous assets nominally owned by the state and the unchecked power of the political elite who have full say on state-owned assets is one of the most important institutional causes of corruption and corruption-driven wealth inequality.
Academic research on corruption in China finds that the tunneling of state-owned assets by the elite, their family members, and cronies is the surest way to amass large fortunes fast. The secret lies in the way such assets are transacted between government agencies and well-connected private businessmen. When the state is the seller, assets such as land, mines, and stakes in state-owned enterprises are severely underpriced. But when the state is the buyer, the assets sold by private businessmen are ridiculously overpriced. These transactions enrich the ruling elite and their families.Bai Epee, the former party chief of Yunnan province, pocketed RMB246 million in bribes in exchange for helping his cronies gain state-owned mines, land, and contracts