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Rich getting richer faster as wealth gap widens

Shanghai Daily, December 6, 2011

• The gap between rich and the poor in China is widening despite a substantial growth in incomes since 1978, according to the latest research.

  Report shows industry income gaps[File photo]

  The average income of the richest 10 percent of the urban population was 8.9 times that of the poorest 10 percent in 2009 compared with 2.9 times in 1985, while urban residents earned 3.3 times more than their rural counterparts in 2009, according to a Chinese consumer research report published by Science Press.

  Earnings have increased markedly since China opened its door to the world in 1979, but along with that has come a yawning divide between rich and poor and the urban and rural population, according to the report.

  From 1978 to 2010, the urban per capita disposable income soared 55 times. Rural residents, however, saw a 43-fold increase in their income.

  The earnings gap between the city and the countryside narrowed to 1.8 to 2.3 times during the 1980s from 2.5 to 2.6 times in the late 1970s, but widened to 3.3 times in 2009. Experts, taking into account housing subsidies, health care, education and other social welfare benefits that urban citizens are entitled to, said the actual income disparity may reach six times.

  The biggest problem in bridging the gap is that the rich are getting richer more quickly. The richest 10 percent of the urban population enjoyed a 37-fold increase in their income from 1985 to 2009 while the middle 20 percent saw a 21-fold increase. But the poorest 10 percent saw their incomes rise just 12-fold.

  The Gini coefficient, a key gauge of income inequality, shows that the yawning gap between China's rich and poor is already pushing the boundaries of social stability.

  Ranging from zero, representing identical incomes among the entire population, to one, which means all income goes to one person, the gauge points to 0.4 as an warning sign of inequality. China's figure, which had passed the 0.4 mark 10 years ago, climbed up to 0.48 in 2010.

  "The disparity between the rich and the poor has gone way beyond the reasonable extent," said Chang Xiuze, professor at Macro Economic Research Institute of the National Development and Reform Commission.

  Tian Qing, the author of the rereport and a professor at Dongbei University of Finance and Economics, said the differences in economic development and structure were the main contributors to the income gap between residents in urban and rural areas.

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