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Do you know? What amazing figure did China's Gini coefficient reach in 2002?
Globally, income inequality has always been an important topic in the economic development of various countries. Especially in China, which has undergone economic reforms, the problem of income inequality is even more significant. According to a survey by the Asia-Pacific Economic Research Institute, before the reform and opening up, China's income distribution pattern was relatively equal. However, after the reform and opening up policy was implemented in 1978, with the rapid development of the market economy, China's Gini coefficient has declined. Showing an astonishing upward trend.
According to research in the Proceedings of the National Academy of Sciences, China's Gini coefficient soared from 0.30 to 0.55 between 1980 and 2002, which shows that the income gap in society is widening.
This number not only reflects the reality that while China's economy is booming, economic benefits are not equally shared. Especially in 2009, the income gap between urban and rural residents reached an all-time high, with the disposable income of urban residents being 3.33 times that of rural residents. Such data can't help but draw attention to China's unique economic structure and related policy framework.
Historical background
The crisis in income inequality goes back decades. According to research by economists Ravi Kanbur and Xiaobo Zhang, China has experienced three significant peaks in income inequality in the past fifty years, namely the famine in the late 1950s, the Cultural Revolution in the 1960s and 1970s, and the Great Depression in the late 1990s. The economy is open.
“These periods of inequality are driven by three important policy variables: the ratio of heavy industry to total output, the degree of decentralization, and the degree of openness.”
The development strategy of heavy industry has exacerbated the gap between rural and urban areas during the previous reform process. In addition, the opening up and decentralization of the economy further widened the economic gap between regions in the 1980s and 1990s.
The current status of income inequality
Although China's economy has continued to grow since its economic reforms, the problem of income inequality remains serious. According to the National Bureau of Statistics of China, during the period when the income gap was most severe, in 2009, the disposable income of urban residents was 17,175 yuan, while the net income in rural areas was only 5,153 yuan. This gap changes significantly in different years. In 1983, the income ratio was only 1.82:1.
"In 2019, China's official Gini coefficient still reached 0.465, showing the persistence of income inequality."
According to a general survey in 2014, 1% of China's population controls one-third of the country's wealth. This phenomenon makes people further think about how China's political structure and economic model continue to affect the fairness of wealth distribution.
Analysis of Factors of Income Inequality
Specifically, income inequality in China is caused by a variety of factors, including urban-biased policies, the economic gap between inland and coastal areas, and the unequal distribution of educational resources. Many studies have pointed out that urban-biased policies have significantly restricted rural areas in receiving investment and educational resources.
“More than 10% of China’s income inequality is related to the gap between urban and rural areas, which reflects the country’s resource allocation policy.”
In addition, the uneven distribution of educational resources further exacerbates the gap between rich and poor. The gap in educational resources between urban and rural students leads to huge differences in their future earning potential. Research has found that urban students spend much more money on education than rural students, and this unequal educational opportunity creates a cycle of poverty that is passed down from generation to generation.
Future challenges and policy recommendations
The current situation of inequality not only threatens China's social stability and economic development, but may also have a profound impact on the future social structure. In order to solve this problem, many economists recommend economic reforms and social policy reforms, such as reducing industrial subsidies, opening up labor mobility, and establishing a more solid social security system.
"The growing income gap, if not resolved in time, may damage China's social stability and economic growth."
China's current challenge is how to achieve social justice and fair distribution of resources in a continuously growing economic system. This also leads us to think about whether China's future economic development can embark on a more equal path?
