Yawning wealth difference widening inequalities in China, warns report

China's wealthiest individuals continue to grow richer, widening economic inequalities in the country despite the ruling Communist Party's efforts to control private businesses and implement policies aimed at boosting people's incomes, a report here said.

The combined wealth of the 5.12 million families in China with over six million yuan (USD 824,000) in assets was stated to be about 150 trillion yuan (over USD seven trillion) in 2024, according to a report published by the Hurun Research Institute.

Of this, the wealthiest 130,000 families accounted for 58 per cent in 2024, which is up from 56 per cent a year earlier, the report said.

China's per capita disposable income was stated to be 41,314 yuan (over USD 41,314) last year, up 5.3 per cent from 2023, the Hong Kong-based South China Morning Post reported, citing the report.

Analysts have warned that Beijing needs to work harder to narrow the wealth gap in society more broadly as it tries to ignite a private sector-led economic recovery, the Post reported on Sunday.

The country is grappling with weak consumption and a languishing property sector, where the rich park most of their assets.

Much of the economic strain is being felt by those in the middle and lower-middle classes, it said.

As a result, the overall consumption essential to halt the economic slowdown grew by just 3.5 per cent last year, a rate that was slower than the 5 per cent rise in GDP, suggesting that the income and wealth gaps were holding back spending.

The growing inequality was reflected in the national Gini coefficient, which was 0.467 in 2022 when the National Bureau of Statistics last updated the number.

A Gini coefficient of 0 reflects perfect income and wealth equality, while 1 reflects maximal inequality, where a single individual has all the income while all others have none.

The yawning wealth gap was also apparent in data from Shenzhen-based China Merchants Bank (CMB), one of the country's biggest domestic wealth management-focused lenders.

CMB said that about 2.3 per cent of its accounts held roughly 81 per cent of the total private banking assets at the institution in 2023, representing a highly unequal distribution, the Post reported.

The Hurun report is published ahead of the upcoming annual Parliament session of the National People's Congress (NPC), which begins its two-week-long session from March 5, during which several legislations to boost the country's economy were expected to be approved.

The NPC would meet along with the advisory body, the Chinese People's Political Consultative Conference (CPPCC), to deliberate on the state of the economy and the country's strategic challenges arising out of US President Donald Trump starting a second stint in power.

Trump said he planned to slap new 10 per cent tariffs on goods from China, escalating trade fights with Beijing.

Already, Chinese goods were hit by 10 per cent tariffs by Trump earlier this month. During his election campaign, he threatened to slap 60 per cent tariffs on Chinese goods to address US concerns over fentanyl, a potent opioid drug blamed for widespread drug addiction in the US.

In a bid to boost the sagging economy, Chinese President Xi Jinping on Feb 17 held a rare meeting with the country's top corporate leaders, including e-commerce giant Alibaba founder Jack Ma, and urged them to unleash their talents to shore up sagging business confidence in the country to reverse the economic slowdown.

Xi's meeting with leaders of the top corporate houses came amid a severe ebb in private sector morale prompted by a volatile mix of economic issues, including heightened geopolitical tensions with the US and harsh regulatory crackdowns on some of the country's business firms.