China’s middle-income earners now make up 37.4 percent of the country’s population, contributing to a slight drop in inequality, according to a blue paper on social development issued by the Chinese Academy of Social Sciences (CASS) on Wednesday.
The Gini coefficient, an internationally accepted indicator of economic inequality, decreased from 0.491 in 2008 to 0.462 in 2015, according to official statistics. That’s mainly a result of the partial closing of the income gap between rural and urban residents, said Li Peilin, vice-president of CASS. But it doesn’t suggest that the income gap between individuals has narrowed, Li noted.
The blue paper’s research team was quoted by the Guangzhou-based 21st Century Business Herald as saying that the income gap has narrowed mainly because of the increasing role of government transfers to the poor.
However, attempts to close the rural-urban income gap have been made particularly difficult in recent years because of decreased income growth across the board, Chen Guangjin, head of the Institute of Sociology at CASS, told the Herald.
Li, however, noted that the incomes of residents from rural areas are dropping as the rate of urbanization slows. With China’s urbanization rate touching 57 percent in 2016 and expected to reach 60 percent by 2020, Li said urbanization is slowing down and the country will see a much weaker growth in the number of migrating farmers. The economic slowdown that started in 2015 has also seen weaker growth in urban incomes, especially among the poor.
The blue paper suggests the government should issue further reforms to income distribution, taxing the rich more while driving low incomes to grow faster. It also suggested speeding up urbanization and shrinking the numbers of rural residents and the poor.
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