Does anyone in China want to go back to the ’80s?

The following is an abstract of an article in PNAS appearing in the 13 May’14 issue (full reference below). The authors are Yu Xie and Ziang Zhou from Peking University and the University of Michigan (respectively). Much is made of income inequality in the USA and what a terrible thing it is. Fortunately for those of the left who find this distressing, there are still a few places left with true equality of income. Cuba comes to mind. Res Ipsa Loquitur.

“Using multiple data sources, we establish that China’s income inequality since 2005 has reached very high levels, with the Gini coefficient in the range of 0.53–0.55. Analyzing comparable survey data collected in 2010 in China and the United States, we examine social determinants that help explain China’s high income inequality. Our results indicate that a substantial part of China’s high income inequality is due to regional disparities and the rural-urban gap. The contributions of these two structural forces are particularly strong in China, but they play a negligible role in generating the overall income inequality in the United States, where individual-level and family-level income determinants, such as family structure and race/ethnicity, play a much larger role.

Since its beginning in 1978, China’s economic reform has led not only to rapid economic growth but also to a large increase in economic inequality. Although scholars continue to debate about precise estimates (1), the consensus is that income inequality in China has now reached a level much higher than that in the United States (2). As we will discuss below, the Gini coefficient for family income in China has now reached a level above 0.5, compared with 0.45 in the United States in 2010. This finding is significant because China had a very low level of income inequality as recently as in the late 1980s (3). Ordinary persons in China know about this increase, as they have personally experienced it in their own lives (4). Although ordinary Chinese people seem to tolerate the high inequality (4⇓–6), they also recognize it as a social problem needing to be addressed. In fact, out of a number of social issues given, respondents in a 2012 national survey rated economic inequality (more precisely, the “rich-poor gap”) the most severe, above corruption and unemployment (7).”

[ Proc. Natl. Acad. Sci. vol. 111 pp. 6928 – 6933 ’14 (Issue of 13 May ’14) ]

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