Rising Income and Wealth Inequality in China: Empirical Assessments and Theoretical Reflections

ABSTRACT

The lack of up-to-date data has hindered recent research on China’s income and wealth inequality. This article fills this void by bringing current official and private data sources looking at these inequalities. The authors further investigate the underlying structural and sectoral policies causing these disparities. They find that the top 1% income share roughly equals that of the bottom 50%. The personal wealth share going to the top 1% exceeds by 5 times the wealth going to the bottom 50%. Failures in redistributive policies have primarily caused these growing income and wealth gaps. Sectoral and national development policies favoring the real estate industry at the expense of the manufacturing industry have also resulted in large-scale wealth shifts, with Chinese households holding increasing housing assets and residential mortgages. This article shows that Piketty’s patrimonial capitalism not only applies to capitalist countries but also extends to China’s socialist market economy.

KEYWORDS:

• Income inequality
• wealth inequality
• patrimonial capitalism
• housing assets
• residential real estate mortgages
• China

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

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Additional information

Funding

The work was supported by the The Hang Seng University of Hong Kong [URC-RS-2122-041 and URC-RS-2223-015]; Beijing Normal University-Hong Kong Baptist University United International College [R202040 and A2037].