“Grey Income” Report: 55 Times Difference Between The Rich and Poor in China

Chinascope, 6/13/2007-

On June 11, Wang Xiaolu, the Vice Director of the National Economic Research Institute of the China Reform Foundation, released a report about “grey income,” the income that is never officially reported. He found that the urban population has and estimated “4.4 trillion Yuan (0.55 trillion $US) of grey income that is not accounted for in China’s national statistics.” [1]

This is the conclusion of the report called, “National Income Distribution Status and Grey Income.” Wang’s research team finished a family income and expense survey on more than 2,000 residents in dozens of cities and counties between 2005 and 2006.

The report generated a lot of interest. For example, the night the Tengxun Network reprinted the article online, it was veiwed 20,000 times and received comments from 4,000 people.

Part of the reason for the interest is the extent to which the targets of the survey differed from those sampled by the National Statistic Bureau (NSB) in that, in this survey, they are relatives and friends of researchers. Wang believed that a survey on this special pool of population generates more reliable estimates.

The survey showed that, “In 2005, the per capita income of the families with the highest 10% of income was 97,000 yuan, 3 times the figure published by NSB (less than 29,000 yuan).” “The estimated urban and rural residents total income amounts to 12.7 trillion yuan (1.6 trillion $US). The grey income that is not accounted for in the NSB statistics of national urban residents is 4.4 trillion yuan (0.55 trillion $US), about 24% of China’s GDP. The per capita income of the families in the top 10% highest income families is 55 times higher than the per capita income of the families in the lowest 10%, while the NSB statistics show the difference to be 21 times.”

Wang defines “grey income” as illegal income, income that is questionable by social moral values, and other income that comes from unknown sources.

One interesting phenomenon that the survey found was that 70% of the high income families declined to reveal their real income.

The research team attempted to verify the reliability of the income data using the value of the resident’s automobiles, their housing, foreign travel, and bank deposits. The verification supported the estimates for the highest income families.

Wang believed that the grey income may be the result of loopholes in the administration of fiscal allocation, according to the State Auditing Administration,

This report is based on “Urban Residents’ Grey Income Totals 4 trillion Yuan” from the 21st Century Business Herald on June 11, 2007.

Notes:

[1] 21st Century Business Herald (21世纪经济报道), June 11, 2007
http://www.nanfangdaily.com.cn/jj/20070611/zj/200706110018.asp

– original report from Chinascope: China Reform Foundation Report: Urban Resident’s “Grey Income” as High as 4 Trillion Yuan