Image via NBER

Since the late 1970s, the United States has experienced a dramatic upsurge of economic inequality. New data reveals that China has too, following capitalism’s path into both wealth and incredibly unfair distribution of that wealth.

A new research paper by Thomas Piketty, Li Yang, and Gabriel Zucman describes what has happened in China since 1978: its share of global GDP has skyrocketed, the wealth-to-income ratio has doubled, the portion of land used for agriculture has shrunk drastically, and—as the country transitioned from Communism to a “mixed economy” in which capitalism sits side by side with a large public sector—income inequality has exploded as well.


The paper says its estimates are likely on the low end of the reality, but nevertheless are the best estimates produced so far. With that in mind, bolding ours:

What is interesting, however, is that our lower-bound estimates of Chinese income inequality are already a lot larger than official survey-based estimates. For recent years, we find corrected top 10% income shares around 41% of total income (as opposed to 31% for raw survey-based estimates), and corrected top 1% income shares around 14% of total income (as opposed to 7% for raw survey-based estimates). According to our series, the top 10% income share rose from 27% to 41% of national income between 1978 and 2015, while the bottom 50% share dropped from 27% to 15%. The urban-rural gap did increase, but most importantly income concentration rose very significantly within both urban and rural China.

In effect, in the late 1970s China’s inequality level used to be less than European average levels — close to the levels observed in the most egalitarian Nordic countries — while it is now approaching U.S. levels. It should be noted, however, that up until today inequality levels in China are still significantly lower than in the United States, despite the much larger population. The bottom 50% earns about 15% of total income in China (19% in rural China, 23% in urban China), vs. 12% in the U.S. and 22% in France.

Freedom will not stop marching until the Chinese underclass elects its very own Donald Trump!



[The full paper]