The distortion of income distribution and the widening wealth gap in China are fundamentally due to the return of "planned thinking" and the anti-market allocation of resources by power.
The Gini coefficient was proposed by Italian economist Gini in 1922 based on the Lorenz curve and is an important international analytical indicator for comprehensively examining the status of income distribution disparities among residents. A Gini coefficient of 0 indicates perfect equality in income distribution, while a Gini coefficient of 1 indicates absolute inequality. Within this range, the smaller the value, the more equal the social income distribution; the larger the value, the greater the social income disparity.
Based on empirical data, 0.4 is generally considered the warning line for the Gini coefficient. Once the Gini coefficient exceeds 0.4, it indicates that national wealth has become highly concentrated in a minority group. A Gini coefficient below 0.2 indicates "highly equal" social income distribution, 0.2-0.3 indicates "relatively equal," 0.3-0.4 is "relatively reasonable," 0.4-0.5 is "disparity is on the high side," and above 0.5 is "highly unequal."
In the United States, the income of the two highest-earning groups exceeds the combined income of the bottom 60% of the population. However, the polarization of income distribution is not as pronounced as in many developing countries because the majority of labor income in the United States falls into the pockets of the middle class.
According to the latest World Bank report, 5% of the U.S. population controls 60% of the wealth. In China, 1% of households control 41.4% of the national wealth, with a wealth concentration far exceeding that of the United States, making it one of the most polarized countries in the world.
China's Gini coefficient has risen from 0.28 at the beginning of the reform and opening-up 30 years ago to 0.47 in 2009, and it is currently still rising. This is a significant signal that the social benefit-sharing mechanism has suffered a serious fracture. Over the past 10 years, income disparities between regions, urban and rural areas, industries, and groups in China have widened significantly. The imbalance in the income distribution pattern has led to the concentration of social wealth in a small number of interest groups, especially in bureaucratic interest groups and monopoly interest groups, and the many problems arising from this have increasingly become the focus of attention from all sectors of society.
Currently, the ratio of urban to rural resident income in China has reached 3.3 times; the wage gap between industries is becoming increasingly obvious, with the highest and lowest differing by about 15 times; the income gap between different groups is also widening rapidly, with the income gap between executives of listed state-owned enterprises and frontline employees being about 18 times, and the difference between state-owned enterprise executives and the social average wage being 128 times.
According to surveys, the income gap between the top 10% of earners and the bottom 10% of earners has risen from 7.3 times in 1988 to 23 times in 2007. As of the end of 2008, the pension level of government civil servants was 2.1 times that of enterprises, and the average monthly pension of public institutions was 1.8 times that of enterprises.
Employees in state-owned industries such as electricity, telecommunications, petroleum, finance, insurance, water, electricity and gas supply, and tobacco account for less than 8% of the total number of employees in the country, but their total wages and non-wage income are equivalent to 55% of the total national wage bill; their average wage is 2 to 3 times that of employees in other industries. If non-wage income and differences in employee benefits are added, the actual gap may be even larger. In addition, the uncounted income of urban residents is estimated to be as high as 4.8 trillion yuan, with the omissions mainly occurring among the high-income households that make up 10% of urban resident households, accounting for 3/4 of all omitted income.
In recent years, university graduates have been scrambling for "government jobs," with even thousands of people competing for a single civil service position. The abnormally high wages in monopoly industries have also been frequently questioned. This "power allocation" model, which relies on government policy bias and resource monopoly, runs counter to the market-oriented principles of equal opportunity and free competition, and has distorted the income distribution pattern.
According to World Bank estimates, the Gini coefficients of Europe and Japan are mostly between 0.24 and 0.36, while China's Gini coefficient in 2009 was as high as 0.47, ranking 36th out of the 135 countries published.
In summary, it can be seen that the serious imbalance in the distribution of national wealth in China, the distortion of income distribution, and the widening gap between the rich and the poor are fundamentally due to the return of "planned thinking" and the anti-market allocation of resources by power. The serious tilt of national wealth toward a small number of interest groups reflects, from one perspective, that serious institutional corruption and resource monopoly have deprived the vast majority of citizens of development and competitive opportunities. Only by continuing to promote marketization, limiting all power within specific boundaries, and allowing ordinary citizens to obtain equal competitive opportunities and possess greater space for choice and development, is the fundamental way to solve the problems of serious injustice in income distribution and the disparity between the rich and the poor.
