China’s ‘common prosperity’ push faces reality check as inequality rises: study
A leading economist warns widening income and wealth gaps are constraining Beijing’s agenda
Offering a rare glimpse into economic distribution beyond official statistics, research by Li Shi, dean of the Institute for Common Prosperity and Development at Zhejiang University, showed that China’s wealth Gini coefficient – a measure of inequality – rose from 0.45 in 1995 to above 0.7 in 2023.
The findings – which also highlight a slowdown in household income growth and a persistently low household consumption rate – were presented by Li at a Peking University forum in late March, but only made public last week.
The world’s second-largest economy was “confronted with challenges in ‘expanding the cake’ – including slowing economic growth, weak consumer demand, declining investment momentum and employment pressure – as well as difficulties in ‘dividing the cake’, such as persistently high income inequality and the ongoing expansion of the wage-wealth gap,” Li said.
Income growth slowed significantly after 2018, with the average annual real growth rate falling from about 8 per cent between 2013 and 2018 to below 5 per cent between 2018 and 2023, particularly affecting low- and middle-income groups, his research found.