Wokai Blog: China Income Inequality May Be Worse Than Expected: Wokai China Microfinance Blog

Lack of data makes China’s income inequality difficult to calculate. Analysis is based primarily on Gini coefficient, which in China’s case, underestimates the data used and excluded many personal incomes from the statistical range. Although the government has been collecting 20 years of household income data, this is not released to researchers.

Data is measured differently in the country (per capita cash income), and in the cities (per capita disposable income). Hence, the income gap between rural and urban inhabitants is underestimated.

Below is an excerpt from Southern Weekend, translated by China Digital Times:

Scholars who study the disparity between China’s rich and poor say a lack of data is their biggest problem. As a result [of the data shortage], there is no way to conduct detailed analysis and research.

“People care most about the Gini coefficient’s [measure] of the national income gap. However, you can see that use of household data estimates from the national Gini coefficient occurred only during certain years.” Professor Li Shi told Southern Weekend that the official statistics bureau has already collected nearly 20 years of survey data on households, “but they have not been made available to researchers.”

Li Shi believes that in regards to the international standard definition of personal income, “the data we can see have always been underestimated. Many personal incomes were not included in the statistical range.”

Currently, the data for Chinese scholars researching the Gini coefficient come from urban and rural household survey teams from different parts of the country. However, the accuracy of data from these “household surveys” has frequently been strongly criticized.

For a while, statistics systems measuring urban and rural personal incomes have used two metrics: in the country side, “per capita cash income,” but in the city, “per capita disposable income.”

In reality, these two income standards do not conform to international ones, and to a large degree, the income disparity between urban-rural residents has been underestimated.