High-income Chinese people missing from Gini coefficient

High-income Chinese people missing from Gini coefficient

China's Gini coefficient, officially released after more than a decade by the country's National Bureau of Statistics, could be failing to catch the grey income of China's wealthy due to their refusal to fill out the survey.

On Jan. 18, the bureau reported that between 2003-2012, the country's Gini coefficient, a gauge of income equality, ranged from 0.47-0.49, peaking at 0.491 in 2008 before declining gradually to 0.474 in 2012.

At the end of 2012, the bureau formulated a unified household survey system, thereby establishing a unified income index. From Dec. 1, it started to compute the incomes of 400,000 sample households for the income-equality survey according to the new system.

Yue Ximin, a professor at the School of Finance at Beijing's Renmin University of China, remarks that the Gini coefficient ranging 0.47-0.49 during 2003-2012, as released by the National Bureau of Statistics, is basically credible.

Income sources for the new survey system include wage income, net business income, net assets income, net transfer income, and net rental income translated from the use of own residences.

Gan Li, director of the China Household Finance Survey at the Southwestern University of Finance and Economics in Chengdu, however, points out that the survey fails to specify the rate of refusal among the surveyed, which is related to the randomness of the samples.

Gan Li reports that in the national Gini coefficient survey carried out independently by the university, the national refusal rate is 11.6%, including 16% in urban areas and 3% in rural areas.

"High-income people are more likely to refuse the survey, which will affect the randomness of sampling," notes Gan.

Incomes of high-income people are likely to be underestimated, which is a major problem for the Gini coefficient survey, since these people often understate their income and hide their gray income.