The Chinese are just now entering their Gilded Age.
By Dan Kopf
Increasing inequality is now at the center of world policy debates, and there is perhaps no person more responsible for that than French economist Thomas Piketty.
His book Capital in the Twenty-First Century examined trends in inequality over the last two centuries in the United States and Western Europe. Piketty found that while inequality had fallen in the mid 20th century, since about 1975 it has been rising at an alarming rate as income from wealth (such as property and other assets) outpaced income earned from working. The 2013 book would become a surprise bestseller and perhaps the most influential economics book of the 21st century.
Now Piketty, along with his colleagues Li Yang and Gabriel Zucman, has turned his sights on China. For a forthcoming paper, the economists use tax data, surveys, and China’s national accounting statistics to estimate the growth of Chinese inequality from 1978 to 2015—the period since China liberalized its economy. The researchers find that while nearly all Chinese people are better off economically than they were three decades ago, the gains have been strongest at the top. They estimate that the share of income going to the top 1% has risen from 6% in 1978 to about 14% in 2015—a share that is less than in the US (20%) but higher than in France (10%).
The researchers say the new data is an improvement on previous attempts to measure Chinese inequality because they were able to use tax statistics available since 2006 on high earners. They claim that older research that only used survey data underestimated inequality because those with the highest incomes were unlikely to get surveyed.