There is one thing in common between the United States and China: Both nations are suffering from widening income inequality.
The so-called Gini Index, an index that shows the rich-poor gap, “in rural China stood at 0.3949, nearing the warning level of 0.4 set by the United Nations,” according to a report released Tuesday (Aug. 21st).
The latest survey by Central China Normal University's Center for China Rural Studies noted that the cash income of rural households grew 14.13 percent from a year earlier to an average of 38,894.4 yuan ($6,173.7) last year, and the per capita cash income in rural areas rose 11.95 percent to 9,260.6 yuan ($1,469).
Farmers in China aren’t getting rich by farming, though. Contributed to such an income growth in the rural areas are rising wages earned by those who have abandoned rural life to work as migrant workers in cities, the study reported.
More troubling is that those in rural households are becoming more dependent on wages earned by their family members who left home. The survey revealed that wages paid to the migrant laborers accounted for 65.7 percent of the total income of rural households.
The survey also found that the total income of the top 20 percent of the rural households was 10.19 times that of the bottom 20 percent. The wealth gap in west China was bigger than in the east of the country, according to the report.
The survey by Central China Normal University did not address the wealth gap in the nation as a whole, because its scope was limited to the study in the rural area.
However, Xinhua, the state-owned news agency, reported that the wealth gap [expressed in the Gini index] in China as a whole is well above 0.4, due to the large income inequality between urban and rural areas. The last time the Chinese government published a Gini index for the nation was in 2000 when it stood at 0.412. But most scholars now believe the index has grown to somewhere between 0.45 and 0.50, reported Xinhua.
In a Gini index, 0 shows perfect equality, and 1 is perfect inequality (i.e. one person has all the income).
According to the U.S. Census Bureau, the Gini index in the United States in 2009 was 0.468. That's getting dangerously close to the Gini index of China, as shown below.
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Yoshida in China: Workers can't afford products they make