Periodic Reporting for period 1 - CHNIEQ (Wealth Acumination and Inequality in China and its Neighboring Emerging Countries: Trends, Drivers and Policy Implications)
Berichtszeitraum: 2018-09-01 bis 2020-08-31
In my project, I have conducted several studies over the topic of inequality in Asian economies. The overall objective of my research is to systemcally measure and analysis the income inequality evolution of Asia as a region and in each Asian economy? Meanwhile in order to provide insight on the nature of rising inequality in Asian economy, I narrowed down my scope to China and Malaysia. For China, I have addressed two questions: a. What is the evolution of the wealth-income ratio, private shares of property, and inequality in China at both the national and provincial level during China’s economic transition period; b. What are the changes in the composition and characteristics of the Chinese economic elites (top 5% of urban population) since the years of early reforms (1980s). For Malaysia, I studied the trend of income inequality, not only at the national level (for the period of 1984-2014) but also by ethnic group (for the period of 2002-2014).
My research contributed to better monitor the inequality trends in Asia, as well as provided insights on understanding the inequality drivers in China and Malaysia for the last 40 years. By doing so, I provided police recommendation for police makers in Asia to mitigate inequality and encouraged debates among the general public on the topic of inequality.
From the global lens, the high growth rate sustained in Asia, especially in China after the eighties allowed for a massive global reduction in poverty rate. However, rising inequality has become a major concern in the region as economies sustain high levels of economic inequality. Meanwhile, due to lack of consistent data, it is almost impossible to compare inequality evolution among countries and estimate inequality in the region systemically. The overall objective of our research aims at solving this obstacle by constructing harmonized Distributional National Account for each Asian economies (consisting of 32 economies, host 4.3 billion population), based on national account, income survey, fiscal data. So that we could understanding how economic growth and resources are distributed in China as well as in other Asian economies, which is a monumentally important task in order to examine global inequality dynamics.
My research contributed to better monitor the inequality trends in Asia, as well as provided insights on understanding the inequality drivers in China and Malaysia for the last 40 years. By doing so, I provided police recommendation for police makers in Asia to mitigate inequality and encouraged debates among the general public on the topic of inequality.
From the global lens, the high growth rate sustained in Asia, especially in China after the eighties allowed for a massive global reduction in poverty rate. However, rising inequality has become a major concern in the region as economies sustain high levels of economic inequality. Meanwhile, due to lack of consistent data, it is almost impossible to compare inequality evolution among countries and estimate inequality in the region systemically. The overall objective of our research aims at solving this obstacle by constructing harmonized Distributional National Account for each Asian economies (consisting of 32 economies, host 4.3 billion population), based on national account, income survey, fiscal data. So that we could understanding how economic growth and resources are distributed in China as well as in other Asian economies, which is a monumentally important task in order to examine global inequality dynamics.
Our studies show that the inequality level in Asia was extremely high in the beginning of 1990s, yet the income gap between rich and poor has widened in the following three decades. The top 1% income share was 19% in the beginning of the 90s, increased gradually to 25% in 2005, and remain at this level afterwards. In contrast the share of total national income of the bottom 50% stagnated below 3% during the entire period. When we look at the top 10% and middle 40%, the results are equally staggering: the gap between top 10% and middle 40% has continuously deepened and in 2019 the top 10% income share in Asia reached to 68% of the total national income in Asia, while the middle 40% only accounted for less than 30%. The rising of top 1% income share in Asia is mainly driving by the sharp rising top shares China, South Korea, and India since 1980s; while the fact that the bottom 50% income shares of Asia is significantly lower than inequality levels within any single Asian economy, shows that between country inequality is still a major factor which explain a significant part of the high inequality levels in Asia.
In order to better understand the natures of rising inequality in Asia context, I conducted two country level studies. First, I narrowed down my focus to China, the biggest economy in the world (by 2020 PPP USD). My study shows that the income inequality in China have raised dramatically since 1980 while the share of public property in national wealth has been decreasing. The top 10 percent income share rose from 27 percent to 41 percent between 1978 and 2015; the bottom 50 percent share dropped from 27 percent to 15 percent. Meanwhile the share of public property declined from 70 percent to 30 percent. Along with the rise of inequality, the composition of China’s economic elites (the top 5% income group in urban China) has also been changed fundamentally, while in 1988, three-quarters of the economic elites were high government officials, clerical staff, or workers, in 2013, the single most important group were professionals, and they, combined with small and large business owners, accounted for over one-half of all economic elites members. Especially, the share of business owners increased from 3% in 1988 to more than 20% in 2013 and there was more than a ten-fold increase in the share of private sector income received by the economic elites. I have conducted similar analysis to Anhui province, as a representative province of the central China region, the results are similar except the trend of rising inequality and privatization is more gradual than the national level.
My second country level study focus on Malaysia, a representative of multiethnic and metaculture country in Asia. My study shows that for the period of 2002 – 2014, Malaysia’s growth features an inclusive redistribution between income classes: the real income growth for the bottom 50% is the highest (5.2%), followed by the middle 40% (4.1%), the top 10% (2.7%) and then the top 1% (1.6%).
Despite of the remarkable overall economic success, it is the rich Bumiputera who benefit the most from the economic growth, i.e. the growth rate of real income per adult accrued to the Bumiputera in the top 1% is 8.3%, which sharply contrasts the much lower growth rate of the Indians (at 3.4%) and negative income growth rates of the Chinese (at -0.6%).
There are three groups of target audiences for us: academic researchers, policymakers, and the general public. By attending academic conference and publishing working papers in academic journals, I communicated and disseminated my research with other researchers. Furthermore, to increase influence of my research among policy makers and the general public, I published articles in the public domain through major news outlets and the World Inequality Report, presented my papers in government institutions (such as the Development Research Center of the State Council of China (DRC) and Malaysia Parliament meeting), and attend meetings and dialogues with multilateral development organizations (such as the United Nations and the World Bank).
In order to better understand the natures of rising inequality in Asia context, I conducted two country level studies. First, I narrowed down my focus to China, the biggest economy in the world (by 2020 PPP USD). My study shows that the income inequality in China have raised dramatically since 1980 while the share of public property in national wealth has been decreasing. The top 10 percent income share rose from 27 percent to 41 percent between 1978 and 2015; the bottom 50 percent share dropped from 27 percent to 15 percent. Meanwhile the share of public property declined from 70 percent to 30 percent. Along with the rise of inequality, the composition of China’s economic elites (the top 5% income group in urban China) has also been changed fundamentally, while in 1988, three-quarters of the economic elites were high government officials, clerical staff, or workers, in 2013, the single most important group were professionals, and they, combined with small and large business owners, accounted for over one-half of all economic elites members. Especially, the share of business owners increased from 3% in 1988 to more than 20% in 2013 and there was more than a ten-fold increase in the share of private sector income received by the economic elites. I have conducted similar analysis to Anhui province, as a representative province of the central China region, the results are similar except the trend of rising inequality and privatization is more gradual than the national level.
My second country level study focus on Malaysia, a representative of multiethnic and metaculture country in Asia. My study shows that for the period of 2002 – 2014, Malaysia’s growth features an inclusive redistribution between income classes: the real income growth for the bottom 50% is the highest (5.2%), followed by the middle 40% (4.1%), the top 10% (2.7%) and then the top 1% (1.6%).
Despite of the remarkable overall economic success, it is the rich Bumiputera who benefit the most from the economic growth, i.e. the growth rate of real income per adult accrued to the Bumiputera in the top 1% is 8.3%, which sharply contrasts the much lower growth rate of the Indians (at 3.4%) and negative income growth rates of the Chinese (at -0.6%).
There are three groups of target audiences for us: academic researchers, policymakers, and the general public. By attending academic conference and publishing working papers in academic journals, I communicated and disseminated my research with other researchers. Furthermore, to increase influence of my research among policy makers and the general public, I published articles in the public domain through major news outlets and the World Inequality Report, presented my papers in government institutions (such as the Development Research Center of the State Council of China (DRC) and Malaysia Parliament meeting), and attend meetings and dialogues with multilateral development organizations (such as the United Nations and the World Bank).
Despite of the important findings presented above; we have to stress that our current simplified Asia DINA series is still very fragile. Asia DINA Project is a longer ongoing process, we are gradually updating the series country by country using new data and new method. Currently we are in the progress of construct full DINA series form Hong Kong, Indonesia, Japan, South Korea, Taiwan, which we believe will bring more exciting findings about Asia income inequality in the future. Our fundamental goal is to construct harmonized reliable inequality measurement which is consistent with national account for all Asian economies, so that other researcher, policy makers and general public could easily use such data to monitor, comparing and analysis income inequality in Asia.