Can China Save Itself from Crony Capitalism?
By any measure, China’s inequality in wealth and income has risen at an alarming pace, reaching new heights in recent years. 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.
These data suggest that the level of wealth inequality in China has risen rapidly, and is now very high. To be sure, about two-thirds of household wealth in China is made up of real estate, with the remaining one-third in financial and business assets.