The daily column clarifies emerging issues and better defines the news agenda, offering a Chinese perspective on the latest global events. Flückiger, Y. We will then adjust regional average income by housing prices in a region to see how that affects inequality in living standards. We calculate the Gini coefficient for each country using each region’s per capita disposable income to measure income inequality. A charitable livestreaming program, according to the same report, has generated more than 40 million yuan ($5.87 million) for selling local specialties from the hardest virus-hit Hubei Province. Cheng, Yonghong, The Evolution of National Gini Coefficient and Urban-Rural Decomposition since the Reform. Yet the cost of living is not equal across regions, especially with respect to nontradable and nonmobile consumption goods such as housing. A value of 1 indicates maximum inequality, while a value of 0 means perfect equality. We’ll email you when a new Regional Economist article is published. And there is also room to further increase spending on social services, especially in rural areas, reducing inequality even more. By pressing “OK” you accept our Cookie Policy. Social Sciences in China, No. Rapid technological change and industrialisation have boosted demand, and therefore incomes, for highly skilled workers. Causes and Consequences of Income Inequality: A Global Perspective. Differences in incomes between urban and rural areas another major factor. Geared to a Main Street audience, this monthly e‑newsletter provides a sampling of the latest speeches, research, podcasts, videos, lesson plans and more. The pandemic "is widening the gap between haves and have-nots in China, a trend that could bring social tensions and undermine the country's stronger-than-expected economic recovery," the Wall Street Journal (WSJ) said in its recent article. In 1973 Albert O. Hirschman published ‘The Changing Tolerance for Income Inequality in the Course of Economic Development’. Liu, Xuke, Impact of Income Sources on Income distribution among Rural Households in China. More than two decades of spectacular economic growth in China have raised incomes dramatically and lifted millions of people out of poverty. 1, 2007. Almost all individual taxpayers will receive a tax cut, with those earning between $27,000 and $45,000 receiving the largest cut in percentage terms. In the U.S., the highest regional income per capita is two times greater than the poorest. 4, 2007. The province with the highest living standard is Shaanxi, and the province with the lowest living standard is Hainan. As the graph below shows, over the past 25 years this indicator reached a maximum value of 43.70 in 2010 and a minimum value of 32.20 in 1990. This huge difference in income between the top and bottom raises the Gini coefficient. In this article, we look at regional per capita disposable income data for China, a developing nation, and the U.S., an advanced economy, to see how income inequality compares between two large countries with a substantial income gap. Gini index (World Bank estimate) - United States, China World Bank, Development Research Group. The Gini coefficient measures income inequality on a scale of zero to one, with zero representing total income equality and one representing total inequality. A higher Gini coefficient means greater inequality. Their evidence supports the financial structure relevancy view and the three argue that to reduce income inequality, the Chinese government should help promote equity financing and decrease excessive speculation on the stock market. 1, 2013. Not affiliated Gu, Haibing & Wang, Yahong, Decomposition of Income Gap between Rural and Urban China Residents: 1985–2007. Learn more about the Econ Lowdown Teacher Portal and watch a tutorial on how to use our online learning resources. The innermost provinces in western China, Gansu and Xizang, have the lowest per capita disposable income, at around 12,000 yuan. By: Living standards within a country can vary greatly due to differences in regional housing costs: adjusting income by regional housing prices provides a better picture of income inequality. Vol. China is also moving forward with plans to impose a property holding tax, but that process – which is more controversial – is expected to take longer. The Journal of Quantitative & Technical Economics, No. It has also helped farmers by abolishing agricultural taxes and improving public services and social protection in the countryside. His research interests include macroeconomics and the Chinese economy. ), Copyright © 2020 CGTN. This opinion piece was originally published in Nikkei’s Asian Review. In analyzing China's wealth inequality, the WSJ, interestingly, gave no solid figure to support its conclusion. ... (World Bank and the People's Bank of China, 2018). The first is to decompose the Gini coefficient by income source, and the second is to decompose the differences between the Gini coefficient in a given year and the average value during the period observed into three components—the inequality effect, share effect, and correlation effect of each income source. Filip Novokmet, Thomas Piketty, Li Yang and Gabriel Zucman compare recent findings on private and public wealth accumulation in China and Russia in their transition from communism to a more capitalist-oriented economic system, and discuss the impact of the different privatisation strategies followed in the two countries on income inequality. 6, 2013. Still, this gap in per capita income remains enormously large. Finance & Trade Economics, No. Across the income distribution, incomes of those in the middle have risen particularly strongly. Chotikapanich, D., Rao, P. & Tang, K., Estimating Income Inequality In China Using Grouped Data and the Generalized Beta Distribution. Reform of Economic System, No. China Information News, 1st edition, 5 February2013. Bai, Suxia & Chen, Jingan, On Income Gap between Urban and Rural China from the Perspective of Income Resources. The author tried to convince readers of China's "growing inequality" compared to where a Chinese factory worker was unable to get his salary paid in the pandemic while another Chinese bought a property in the same period. Speaking of taxes, Gabriel Wildau reports for the Financial Times that China is indeed planning an income-tax cut in order to boost consumption and reduce inequality. This is less than the previous measure based solely on disposable income in China, suggesting improved distribution and equality. That means China's Gini coefficient (0.481) belongs to a handful of countries with top inequality in the world, not only higher than that of western developed countries, but also above Asia's … 1, 2011. Ben Westmore at the OECD writes that income inequality as measured by the Gini coefficient has been on a declining trend since 2008, having climbed to a very high level – reflecting some regional income convergence as the central, western and north-eastern parts of the country have made progress catching up with the east, and a narrowing of the urban-rural income gap. A freshly coined buzzword looks set to play […], 台灣的貨幣政策和大多數國家相比仍屬相對緊縮，台幣升幅也是相對有限。總的來說，台灣第二季的GDP與其他國家相較算是非常優異，主因是行動管制少，所以衝擊也小得多。. 7, 2010. It shows that the Gini coefficient has risen by 15 points since 1990 to 50: that is a big change, even though some increase in inequality could have been expected as the level of development improved. & Silber, J., Income Inequality Decomposition by Income Source and the Breakdown of Inequality Differences between Two Population Subgroups. The poorest state is Mississippi, with per capita income of around $32,000. Across China’s provinces, the standard of living varies much less than income alone. Sonali Jain-Chandra published a striking chart on income inequality in China on the IMF blog – which is based on a recently issued working paper. This service is more advanced with JavaScript available, A New Era : 1002-8102(2016)11-0034-13, Over 10 million scientific documents at your fingertips. This is based on authors’ calculations using consumption expenditure data from the National Bureau of Statistics of China. ... the richest 10 percent of American households held 70 percent of total household wealth in 2018, up from 60 percent in 1989. However, Since we are using average income in a region, the Gini coefficient will be less than if we were using each individual’s own income in each country.For example, an individual whose income is in the 90th percentile will have an income many times greater than that of someone in the bottom 10th percentile. Therefore, factoring in cost of living can yield fruitful insights about true inequality. Init he argues that in the early stage of development, when income inequality among different classes, sectors, and regions tends to rise, society’s tolerance for this inequality will be substantial. Interestingly, regions with high per capita disposable income also tend to have high housing prices. In fact, China has moved from being moderately unequal in 1990 to being one of the world’s most unequal countries. The Gini of cross-regional income per capita is 0.19. China has implemented policies to limit inequality, which helps explain why it has leveled off and even declined slightly since 2008. China has moved from being moderately unequal in 1990 to being one of the world’s most unequal countries (photo: Stephen Shaver/UPI/Newscom). What accounts for the jump? Living standards within a country can vary greatly due to differences in regional housing costs. As China turned out to be the first major economy to recover from the COVID-19 pandemic, certain Westerners became even more blatant in discrediting the country they deemed a challenge. Consumer Expenditures—2016. For all Beijing's ambitions of cracking the hegemony of the US dollar in the face of Trump administration sanctions, the yuan still has a long way to go. :F036; Document Code: A; Paper No. The WSJ report cannot erase this fact," Liu emphasized. High on the body’s agenda will be sketching out a new official five-year plan for Asia’s largest economy. Therefore, the Gini coefficient will be smaller in this case. The data reached an all-time high of 0.491 NA in 2008 and a record low of 0.462 NA in 2015. and it represented about 33 percent of household expenditure in the U.S. in 2016.This is based on authors’ calculations using consumption expenditure data from the Bureau of Labor Statistics. The price of housing in D.C., the most expensive region, is over five times higher than home prices in Indiana, the least expensive state. The Gini coefficient is based on the comparison of cumulative proportions of the population against cumulative proportions of income they receive, and it ranges between 0 in the case of perfect equality and 1 in the case of perfect inequality. However, solely looking at income tells only part of the story about the difference in people’s living standards because income does not reveal information about the cost of living. 2, is among the highest in the world. Sonali Jain-Chandra published a striking chart on income inequality in China on the IMF blog – which is based on a recently issued working paper.It shows that the Gini coefficient has risen by 15 points since 1990 to 50: that is a big change, even though some increase in inequality could have been expected as the level of development improved. Income inequality has increased markedly in both China and Russia since the beginning of their respective transitions but the rise of inequality was much more pronounced and immediate inRussia,and was more limited and gradual in China. pp 59-82 | This article is one of the milestones of “Understanding, Adapting to and Leading the New Normal of the Economy”, a research sub-project of the 2011 Collaborative Innovation Center for the Development of Socialist Economy with Chinese Characteristics sponsored by the Ministry of Education. The cross-regional average of per capita disposable income is about 22,000 yuan, and the cross-regional median of per capita disposable income is about 18,600 yuan.

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