China suffering the ‘Russian disease’ of growing inequality and corruption

China suffering the ‘Russian disease’ of growing inequality and corruption
Opinion polls say people in China are getting increasingly worried about growing inequality and corruption, – something Russia has always suffered from. While the situation may look alike, the level of the problem is totally different.

Almost half of people in China questioned, or 3,177 adults, indicated the issue of social inequality as a “very big problem,” according to the Pew Global Attitudes Project. This marks a 7% increase from 2008. Corruption is another reason for public discontent, as 50% of people asked said official corruption was a very big problem, compared with 39% four years ago.

One of the ways to assess the fairness of income distribution is the Gini coefficient – an index tailored to indicate the income gap. China was ranked 27th, with the coefficient standing at 0.48 in 2009, according to the Central Intelligence Agency (CIA).

Readings vary within the range of 0 to 1. The closer a reading is to 1, the greater the inequality is, with a 0.4 mark considered to be a predictor of social unrest.

Russia, however, looks better on this list taking 52th position, as its Gini coefficient stood at 0.42 in 2010. Namibia, South Africa and Lesoto have the highest Gini coefficients in the world, standingat 70.7, 65 and 63.2. People in Sweden should enjoy the most fair wealth distribution, as the Gini coefficient there was the lowest at 23.

Statistics differ, as The Global Wealth Report released by Credit Suisse last week said that it was Russia where inequality was the highest in the world. While billionaires worldwide normally own 2% of total household wealth, in Russia around 100 billionaires have 30% of all personal assets.

“Worldwide there is one billionaire for every USD 194 billion in household wealth; Russia has one billionaire for every $15bln,” the report said.

In China, “overall wealth inequality in the year 2000 was low — both by broad international standards and in comparison to other transition countries,” the report evidences further.

People in the world’s second largest economy are also generally better off, as wealth per adult in China stood at $20,500 in 2011. In Russia the indicator reached about $12,000 in 2012.

Household wealth is calculated as a sum of financial and non – financial assets of people, where the latter includes mostly housing. Financial assets embrace all kinds of financial instruments varying from normal deposits to more sophisticated insurance schemes.