Abstract
This paper argues that after a quarter century of sharp and sustained increase, Chinese inequality is now plateauing and even turning down. The argument is made using a range of data sources and a range of measures and perspectives on inequality. The evolution of inequality is further examined through decomposition by income source and population subgroups. Preliminary explanations are provided for these trends in terms of shifts in policy and structural transformation of the Chinese economy. The narrative on Chinese inequality now needs to focus on the reasons for this great turnaround.
Highlights
Alongside the spectacular growth and extraordinary reductions in poverty, perhaps the most dramatic in human history, the evolution of Chinese income inequality since the start of the reform process in 1978 has been a focus of interest among analysts and policy makers
With changes in the economic structure and new policy tools introduced in recent years, a revisit of Chinese inequality should give us the latest information about its evolution and the impacts of these economic and policy changes on income distribution
Household-level data are from two surveys, the Chinese Household Income Project (CHIP) and the China Family Panel Studies (CFPS)
Summary
Alongside the spectacular growth and extraordinary reductions in poverty, perhaps the most dramatic in human history, the evolution of Chinese income inequality since the start of the reform process in 1978 has been a focus of interest among analysts and policy makers. Household-level data are from two surveys, the Chinese Household Income Project (CHIP) and the China Family Panel Studies (CFPS). While the public RUMiC data are based on a different questionnaire from previous waves of CHIP and have no income component details, CHIP 2007 has a restricted nationally representative NBS sample dataset that is consistent with the previous waves. There should be no systematic distortion on the aggregate level, as there is no cutoff year in which the statistical approach changed for all This is the data base for our assessment of Chinese inequality trends over the last 20 years. We proceed to a description of the overall trends and the decomposition patterns in the data
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