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UPDATED: February 4, 2013 NO. 6 FEBRUARY 7, 2013
What's the Real Income Gap
Gini coefficient figures arouse calls for reforming the income distribution system
By Lan Xinzhen


"A journalist called me asking for comment on the macroeconomic figures released today. Am I crazy to say anything based on false facts? For the Gini coefficient, even fairy tales dare not be so bold."

This statement was written on January 18 by Xu Xiaonian, a famous Chinese economist and professor with the Shanghai-based China Europe International Business School, via Weibo, a Twitter-like microblog website. On that day, the National Bureau of Statistics (NBS) released various figures on the country's economic operations in 2012.

Xu has more than 5.5 million followers online, many of whom are media insiders who quickly forwarded and shared his post. "Even fairy tales dare not be so bold" also became a popular phrase for scoffing at the authenticity of statistics.

This is the first time the NBS has released Gini coefficient figures since 2000. For years beforehand, it regularly revealed such information, but subsequently stopped because the "Gini coefficient is said to be unsuited to the conditions in China."

At a press conference on January 18, in addition to the Gini coefficient information for 2012, the NBS also released annual figures from as far back as 2003. Ma Jiantang, Commissioner of the NBS, provided no reason for the move, causing widespread queries. Whether the figures truly reflect income inequality among Chinese residents has become the focus of much argument.

Government figures

According to the NBS, China's Gini coefficient reached its highest level in 2008, standing at 0.491, but began to drop after that. In 2012, the coefficient reached 0.474.

Ma says that to calculate the Gini coefficient, China previously only had figures related to the per-capita net income of rural residents and the per-capita disposable earnings of those in urban areas, but no information based on comparable indicators.

Thus, for the past two years, the NBS has made reforms to the statistical system on resident income. As of December 2012, 400,000 households in both urban and rural areas are incorporated into a new scheme by which salaries are registered in uniform comparable standards. Accordingly, household earning figures have been recalculated to yield China's Gini coefficient from 2003 to 2011.

According to Ma, after the 2008 global financial crisis, local governments at various levels adopted powerful measures to improve people's livelihood, which serves as the major reason for the drop in the country's Gini coefficient from 0.491.

Anticipating that the figures might cause dispute, Ma emphasizes that World Bank and NBS figures correlate, with the latter's information even a bit higher. He adds that the Gini coefficient figures from 2003 to 2012 were calculated in accordance with new standards, but based on old statistics, making further revision likely.

Arousing dispute

Besides Xu, some other reputable economists and research institutes have voiced skepticism about the NBS Gini coefficient figures, arguing that it cannot fully reflect the reality of China's massive income inequality.

According to a report released on December 9, 2012, by China Household Finance Survey and Research Center, affiliated with the Southwestern University of Finance and Economics (SWUFE) located in Chengdu, Sichuan Province, in 2010 the Gini coefficient based on China's household income was 0.61, which is in clear contrast to the figure of 0.481 recently released by the NBS.

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