China's widening wealth gap: top 1% own a third of assets

A new report shows China's wealth gap is widening: 1% of the population owns around a third of China's wealth while a quarter of Chinese households own just 1%. One of the reasons contributing to the growing wealth disparity is that those working for the government, army and state-owned enterprises, known in China as "inside the system", earn a higher salary than those who work outside it. The report also highlights imbalances in education and health insurance. Factors such as "Hukou" (household registration), party membership and birthplace determine who has access to the best education in China while health subsidies, intended to reduce social inequality, are favouring the rich instead of the poor.

A new report from Peking University, one of China’s top higher-­education institutions, concluded that economic divisions in China are expanding: one percent of the population owns a third of the country’s assets, whereas 25 percent of Chinese households own just one percent of the country’s wealth.

Based on information provided by China Family Panel Studies (CFPS), 14,960 families from 25 provinces in China were assessed for the survey which had six main topics, namely: family wealth; consumption patterns; medical expenses; family business and self-­employment; housing; sense of happiness.

The data shows that the Gini coefficient of income distribution, a widely used formula to measure inequality, was estimated to be 0.49 in 2012, largely surpassing the 0.3 coefficient estimated in the 80s. Additionally, China’s Gini coefficient of wealth increased from 0.45 in 1995 up to 0.73 in 2012. There are a few reasons which contribute to wealth inequality among the Chinese population. The report highlights the fact that people working for the government, for the army, and for state-­owned enterprises, which are well known in China as “inside the system”, have a higher salary than those pursuing work opportunities outside this system.

Statistical results stemming from the same research conducted in 2012, show that the average salary “inside the system” amounts to RMB14.758, while a non-governmental worker brings home RMB9,297. The wage gap is further exacerbated by the Hu Kou system, wherein a countryside worker earns less than their city peers.

The social inequality captured by the report also drew attention to imbalances in education and health insurances. With regards to the former, the distinct inequality is easily traced back to region, gender, and Hukou, the latter being the one with greater influence.

The Hukou system is a record in the system of household registration required by law in China (together with the province of birth, political identity, and educational background of parents) that has been gradually shaping the nature of educational resources offered to children.

In turn, health insurance, which is supposed to diminish social inequalities, is having the opposite outcome. Commonly, patients suffering from serious health conditions are the ones in utmost need of medical resources, and are the ones who face bigger problems of health insurance. According to the survey, health subsidies are imbalanced and favor the rich instead of the poor.

In terms of gender equality, Chinese women have lower levels of education, lower wages, and are not as efficiently protected by health insurance systems. On top of that, women are often involved in lower ranking jobs with regards to quality.

Health insurance provided to residents of the countryside and to city dwellers are two disparate worlds. Staff reporter

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