What China's Newly Released Inequality Data Really Means

China says income inequality is dropping. Is this really true?

Inequality.jpg
A Ferrari 458 Spider is loaded onto a truck after being bought by a young Chinese at its showroom in Shenzhen(Bobby Yip/Reuters)

When the National Statistics Bureau announced China's 2012 GINI coefficient -- a measure of income inequality -- on January 21, the figure caught everyone by surprise, like a genie out of a bottle. The reaction was as much about the number itself as about its release: not only was the 2012 index the first official release since 2001, it was also the country's second lowest GINI coefficient in ten years. (On the same day, the government also released missing indices from 2002 to 2011. "A lack of unified survey standards in rural and urban areas," it claimed, accounted for the delay.) At a level of 0.474, the 2012 GINI coefficient was lower than the 2003 figure of 0.479, suggesting that China is, at least numerically, a slightly more equal society today than a decade ago.

The GINI coefficient, according to the World Bank , is the most commonly used measure of inequality. Reported on a scale between 0, which reflects complete equality, to 1, which reflects complete inequality, the figure gauges the distribution of income among a country's residents. The CIA World Factbook, for example, calibrated China's 2009 GINI coefficient at 48 (on a variant scale of 0 to 100), while researchers at the Southwestern University of Finance and Economics in Chengduput the number at an alarming 0.61 in 2010. The official numbers, by contrast, took a middle ground: the indices were reported at 0.49 in 2009, and 0.481 in 2010.

Gloating, to be sure, was hardly the government's intent for letting the GINI out; on the contrary, as social divisions continued to fray bonds between public and private sectors and between haves and have-nots, the coefficient's release was a belated acknowledgment of inequality that had been long-submerged in official discourse until now. "The statistics highlighted the urgency for our country to speed up the income distribution reforms to narrow the wealth gap," said Ma Jiantang, the bureau director, as quoted in a report by Xinhua news agency.

Despite the government's best intentions, however, few social media users were willing to put much stock in the numbers, because many believe inequality has worsened over the past decade based on personal experience and observations. The timing of the release, combined with its doubtful conclusion that showed a lessening of inequality, triggered a wave of skepticism and scorn in China's micro-blogosphere. Many put their disbelief in the harshest terms: "A journalist called me and asked me to comment on today's macroeconomic figures. Wouldn't I be sick in my head to comment on such false figures?" wrote Xu Xiaonian (@许小年), a professor of economics and finance at China Europe International Business School, on Sina Weibo, a Twitter-like platform in China. "That GINI coefficient, in the words of Zheng Yuanjie, a children's story writer in China, is a fairy-tale that no one would dare to write."

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Yi Lu is a contributor to Tea Leaf Nation.

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