Official Gini Coefficient Indicates High-level Income Inequality in China

After being silent for a decade on an indicator of income inequality, the Chinese government has released the official Gini Coefficient for China in the past year - 0.474.

 Along with the figure for 2012, the Chinese National Statistics Bureau also published China’s Gini Coefficients for the past 12 years, starting with 2000. The official data shows that during the period, China’s Gini Coefficient reached its highest point in 2008, hitting 0.91. Since then the indicator has come down to lower levels, dropping to 0.90, 0.81, and 0.77 in 2009, 2010, and 2011 respectively.

Economists use Gini Coefficient to measure the polarization between the income of the rich and the poor. A Gini Coefficient of 0 means income are distributed completely equally whereas 1 suggests total inequality. Scholars commonly take a Gini Coefficient of 0.40 as a warning line, that is, income inequality higher than this level may lead to social and political instability.

Partly due to its political implications, the Chinese government has refrained from publishing official Gini Coefficient figures, saying that the indicator does not sufficiently reflect the complexity of the Chinese economy. The releasing of the official data this year marks an evident change in policy.

With a Gini Coefficient of 0.47, income inequality in China is higher than that in Europe, comparable to that in the United States, and lower than figures for Latin American countries such as Brazil and Mexico.