Cup of Cha
This is China

A couple of days ago I was poking around on Frog in a Well, a fairly academic blog on Asia run by several professors, when I ran a across an article on Gini Coefficients. It got me thinking about the income inequality now in China, and what it was just before the Communist revolution that succeeded in 1949. The two major impetuses for the revolution were class difference and the corruption in the Nationalist （国民党）government. With the rich-poor divide growing in modern China I thought it would be interesting to compare conditions now to those back then.

Before we get started, let me give a very brief technical introduction. The Gini Coefficient is a measure of income inequality in a society based on a scale of zero to one. The lower the number, the more equal a society is. Scandinavian countries tend to have fairly low ones, like Sweden (.25), while Namibia has the highest recorded number in the world at about .7. Anything above about .4 is considered quite high and potentially de-stabilizing.

One of the challenges for China is that its unparalleled growth has not taken place in a even way. It has been well-documented that the rural-urban, rich-poor divide has been greatly exacerbated under the Open Door policy (改革开放）. According to research at George Washington University China’s Gini Coefficient was a low .23 in 1981. Of course this extremely low number was a reflection of the fact that no one had money. Today the number is estimated to be just under .5 (at least .47 or so), which stems from the overwhelming amount of wealth being generated, and the fact that it tends to be concentrated in the hands of a few.

According to the same Harvard research that Frog in the Well cited, China’s Gini Coefficient in the 1930s was very similar to that of today. They estimated it to be about 4.6, strikingly similar to the current situation. Another article that I found isolated for urban and rural situations and found that taking this into account reduced each to a more manageable .35 (I’m embarrassed to admit I closed the article and now cannot find it). This urban/rural divide, however, may simply emphasize that the inequality is systematic, and it is leaving those outside of the cities behind. It has led to massive urbanization as migrants look to escape the poor countryside and get across the divide into the country’s wealth. This migration is so strong that estimates indicate Beijing’s population will balloon to 20 million in 12 years.

This does not mean that revolution over wealth inequality is just around the corner. In fact, I would argue that the mass uprisings in the countryside over environmental problems pose a greater threaten to stability than economic inequality does. If the drinking water is giving you cancer you have nothing to lose, but if you are jealous that a neighbor has a bigger television, you are unlikely to resort to stirring up the massing.

One of the biggest differences between modern China and that of the 1930s is that there are many fewer people living in total poverty than there were 80 years ago. The recent boom has pulling millions up, leaving them in much less desperate situations than in the past. Nonetheless the government does seem to concerned, and its constant rhetoric about a “harmonious society” reflects that. Yet a government overthrow hardly appears to be just around the corner. Remember, America’s Gini Coefficient is nearly as high as China’s, and few people expect a peasant revolt there

So if you’re talking about a revolution, as John Lennon might say, China’s growing income inequality is unlikely to spur it. It is, however, amazing to see that the current wealth gap is similar to those that inspired the Red Army to take up weapons and take down China’s government.

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