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
As China's annual parliamentary meetings kick off, Beijing gauges progress on key economic reforms outlined last year.
March 7, 2014 -- Updated 0719 GMT (1519 HKT)
For some local Hong Kongers, the local economy is being geared to the needs of cashed-up Chinese day-trippers, rather than locals.
March 6, 2014 -- Updated 1027 GMT (1827 HKT)
Vladimir Putin is seeking China's support in Russia's standoff with Western powers over Ukraine.
February 27, 2014 -- Updated 0824 GMT (1624 HKT)
What's the story with WeChat, the messaging app taking China by storm?
February 28, 2014 -- Updated 0501 GMT (1301 HKT)
Outgoing U.S. Ambassador to China Gary Locke speaks to CNN about his time in China.
February 26, 2014 -- Updated 0449 GMT (1249 HKT)
Limited investment options in China means real estate has been a popular choice for consumers looking to expand their portfolios.
February 27, 2014 -- Updated 0140 GMT (0940 HKT)
It's sexy, sophisticated, skintight, and started as a Chinese feminist statement. Here's the story of China's "cheongsam"
February 25, 2014 -- Updated 0911 GMT (1711 HKT)
Linkedin, the networking site for professionals, has done what few other foreign online services have achieved -- it has successfully set up its China operations.
February 25, 2014 -- Updated 0408 GMT (1208 HKT)
With its tradition of free speech, Hong Kongers pride themselves on their strong opinions -- but now local journalists say they are being shut up.
February 25, 2014 -- Updated 1019 GMT (1819 HKT)
Beijingers are once again choking as smog levels hit "heavy or even worse" levels in the capital and other cities across the country.
February 21, 2014 -- Updated 1349 GMT (2149 HKT)
China has urged U.S. President Barack Obama to call off a meeting at the White House with Tibetan spiritual leader the Dalai Lama.
February 19, 2014 -- Updated 1205 GMT (2005 HKT)
Far from being censored, the U.S. political drama 'House of Cards' is widely available in China -- and surprisingly popular.
February 19, 2014 -- Updated 0833 GMT (1633 HKT)
Like many companies in China, Fu Shou Yuan uses celebrities to attract clients. Except, in this case, they're dead.
February 19, 2014 -- Updated 0319 GMT (1119 HKT)
On the Reporters Without Borders map of global press freedom, China appears as one big black spot.
February 18, 2014 -- Updated 1312 GMT (2112 HKT)
The panda was whipped by zookeepers, was fed corn cakes instead of bamboo, and lived in a home full of feces, say visitors.
February 19, 2014 -- Updated 0212 GMT (1012 HKT)
A Miami artist has destroyed a $1 million Ai Weiwei vase as a "spontaneous protest."
February 17, 2014 -- Updated 0946 GMT (1746 HKT)
Two Russian thrillseekers scaled the unfinished Shanghai Tower in the city's financial district -- and lived to tell the tale.
Today's five most popular stories