Hidden trillions widen China's wealth gap: study

Thu Aug 12, 2010 7:42am EDT
 
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BEIJING (Reuters) - China's richest citizens are even wealthier than the statistics suggest, and may hold as much as 9.3 trillion yuan ($1.4 trillion) of hidden assets, according to a Credit Suisse-sponsored study by a top economic think-tank.

Official statistics for 2008 failed to capture income equivalent to about 30 percent of China's gross domestic product, the "Analyzing Chinese Grey Income" report found.

And nearly two thirds of that unreported income goes into the pockets of the richest 10 percent, widening China's already troubling wealth gap, said Wang Xiaolu, the economist at the China Society of Economic Reform (CSER), who headed the survey.

The findings may explain in part Beijing's tolerance of recent strikes in manufacturing zones, and official emphasis on ensuring more equitable division of wealth, the report added.

Average per-capital income for the richest 10 percent, at 97,000 yuan, was 65 times of that of the poorest 10 percent, Wang's survey showed -- instead of the 23 times figure given by official National Statistics Bureau's household income survey.

"It means the wealth gap is widening, and the distribution of national income is becoming more and more unfair," it concluded.

A fairer income distribution could ease social tensions and support Beijing's plan to boost domestic consumption.

"One very interesting observation to argue for the highly uneven income distribution in China is reflected in the strong buying power of its richest people," the report said.

China accounted for 3 percent of sales for a brand like Volkswagen and 5 percent for Pepsi, while for luxury retailers like Richemont and Swatch Group, it made up 20 and 28 percent respectively.   Continued...