x Abu Dhabi, UAEThursday 18 January 2018

China study warns rural wealth gap near 'danger' level

Hundreds of millions of people are shunning farming for better paid city work, causing a widening wealth gap, new report says.

SHANGHAI // China's rural inequality is nearing "danger" levels as hundreds of millions of people shun farming for better paid city work, causing a widening wealth gap, a report said.

The state-linked Centre for Chinese Rural Studies said inequality within rural areas was growing given the difference in incomes between those who farmed and those who flocked to cities as migrant workers.

Although the majority of migrant workers live in cities for most of the year, they are officially registered as rural residents.

"The difference in rural residents' income is getting bigger and pressure on living expenses is increasing," the centre said in a statement reported in state media yesterday.

China's growing wealth gap is a major concern for authorities keen to avoid public discontent that could lead to social unrest in the rapidly developing country of 1.3 billion people.

The centre estimated the Gini coefficient - a commonly used measure of inequality - was 0.3949 for rural residents last year, nearing what it called the "danger" level of 0.40, the statement said.

The Gini coefficient measure varies between 0, reflecting complete equality, and 1, which indicates complete inequality.

The release marked the first time the centre had compiled an estimate, so no comparative figure was available.

China has not released a Gini coefficient for the country as a whole for more than a decade, putting the figure at 0.412 in 2000, amid worries over the widening income gap.

An official said in January that data on high-income groups was incomplete to explain why the government had again failed to issue the statistic for 2011.

Rural residents who work as migrant labourers in cities earn twice as much as those who farm for a living, the official Xinhua news agency quoted the centre as saying, but gave no figures.

As a result, incomes as a whole for rural households were rising sharply, with average cash income jumping more than 14 per cent to about 38,900 yuan (Dh 22,700) last year, the Xinhua report said.

Deng Dacai, the deputy head of the centre, said the Gini coefficient for all of China was likely to be "well above" 0.40, Xinhua reported. The authors of the study could not be reached for comment.

The government-backed Chinese Academy of Social Sciences estimated China's Gini coefficient at nearly 0.47 in 2005.

"China should already have the statistical foundation to issue the nationwide Gini coefficient," said Wang Jianmao, an economics professor at the China Europe International Business School in Shanghai.

"The key is whether it's willing to issue it."

The United Nations Industrial Development Organisation, referring to the 0.47 level and lagging rural incomes, has said: "At this level of disparity, many would argue that China is in danger of serious social instability."