Report: 'Hidden income' makes China's rich wealthier than thought
September 24, 2013 -- Updated 0701 GMT (1501 HKT)
A 2011 file photo of a cleaner sweeping the floor next to a Ferrari in a
Beijing luxury car showroom.
- Survey: China's urban rich are making far more than they officially report
- Researchers found unreported "gray income" was 6.2 trillion yuan (U.S. $1 trillion)
- Suggests the top 10% of households earn nearly 21 times more than the poorest
- "The richer the household, the more likely it receives shadow income"
Hong Kong (CNN) -- China's urban rich are making far more than they officially report, suggesting the wealth gap in the world's second largest economy is much higher than previously thought, according to a new study.
The China Society of Economic Reform released a survey Monday that found "gray income" was 6.2 trillion yuan (U.S. $1 trillion), or 12% of GDP. "Gray income" can range from illegal cash from kickbacks to unreported income and gifts.
"The result has highlighted expanding social inequalities and policy issues surrounding official corruption and income distribution," said Wang Xiaolu, who led the research for the CSER, in an article in Caixin Online. "The richer the household, the more likely it receives shadow income."
The study comes a day after Bo Xilai, a once high-flying politician, was sentenced to life in prison for bribe-taking,15 years for embezzlement and seven years for abuse of power. Bo is appealing the verdict.
The CSER surveyed 5,344 urban families in 18 Chinese provinces. The results suggest the top 10% of households earn nearly 21 times more than the poorest 10%. The National Bureau of Statistics places income disparity far lower, saying China's wealthiest make 8.6 times more than its poorest. "China is in a dangerous zone as one the most unequal countries in the world," Wang wrote.
The survey found that rich families gain 80% of their wealth from business and on average "have decent gains" in stock markets, whereas most middle and lower income families lose cash in the capital markets, Wang said. "We can't rule out that some of these business gains are problematic, or even illegal, because many survey takers count kickbacks as business gains," he wrote.
Much of the high gray income is linked to the loose credit handed out between 2009 and 2010, Wang wrote, as well as the rapid increase of government investment during the same period.
"To stop widening income disparity and unfair allocation, in addition to anti-corruption campaigns, there needs to be gradual but firm progress in economic, political and social reform that moves the country closer to the rule of law with public scrutiny over administrative power," he said.
Part of complete coverage on
December 17, 2013 -- Updated 2310 GMT (0710 HKT)
A worker operating a machine in a workshop accidentally cut off his hand -- which doctors were able to save by grafting it onto his ankle.
December 18, 2013 -- Updated 0300 GMT (1100 HKT)
What happened when one high-flyer ditched an academic career to teach in a poor, rural school.
December 16, 2013 -- Updated 1258 GMT (2058 HKT)
12 years ago, Chengdu's panda breeding research base only had 20 pandas, now the center is home to more than 100 of them.
December 17, 2013 -- Updated 0630 GMT (1430 HKT)
Shanghai's 15-year-olds ranks first in the world for reading, math and science; but what about the rest of the country?
December 14, 2013 -- Updated 2159 GMT (0559 HKT)
China's first lunar rover, deployed successfully from the unmanned spacecraft Chang'e-3, landed on the moon Saturday.
December 13, 2013 -- Updated 2352 GMT (0752 HKT)
A U.S. Navy guided missile cruiser took evasive action to avoid colliding with a Chinese warship. CNN sources called it a deliberate act by China.
December 13, 2013 -- Updated 1144 GMT (1944 HKT)
A Santa Claus doll rocks a sexy red suit while doing his best Marilyn Monroe "Seven Year Itch" pose outside a shopping mall in China.
December 10, 2013 -- Updated 0435 GMT (1235 HKT)
Traditional teaching methods in rural schools highlight China's education challenges where students struggle with creative learning.
December 10, 2013 -- Updated 0052 GMT (0852 HKT)
Laws prohibit discrimination against people living with HIV/AIDS in China but campaigners say reality suggests a different story.
December 9, 2013 -- Updated 1312 GMT (2112 HKT)
China has banned shark fin and bird's nest dishes from official banquets as part of a government crackdown on official extravagance.
December 6, 2013 -- Updated 0756 GMT (1556 HKT)
With more than a third of the world's bitcoin transactions flowing through one Chinese website, China is at the heart of the bitcoin frenzy.
December 3, 2013 -- Updated 2051 GMT (0451 HKT)
When it comes to mathematics, reading and science, the OECD says Shanghai teens are the best in the world.
December 2, 2013 -- Updated 1411 GMT (2211 HKT)
China launched its first lunar probe early Monday, making it the world's third nation to soft-land on the moon.
November 29, 2013 -- Updated 0521 GMT (1321 HKT)
President Xi Jinping has reshaped China's foreign policy by recalibrating its stresses on sovereignty and stability.
November 28, 2013 -- Updated 2205 GMT (0605 HKT)
China sends fighter jets into its newly claimed air defense zone above the East China Sea as Japan's military remains defiant.
A flying ray? A trapped spaceship? No, it's Shenzhen's new airport terminal.
Today's five most popular stories