China Scholar Li Shi, who specializes in studying “common prosperity,” has revealed that the wealth gap in China has widened significantly, with the wealth Gini coefficient soaring above 0.7, far exceeding the internationally recognized warning line of 0.4. Experts interviewed pointed out that the Chinese Communist Party’s distribution system has serious deviations, prioritizing the interests of the elite and the party-state operation while neglecting social welfare. The philosophy of “lying flat” has now become a philosophy embraced by the younger generation in response to the system’s “exploitative structure”.
Chinese leader Xi Jinping has been emphasizing “common prosperity” in recent years, claiming to be committed to narrowing the income gap. However, Li Shi, director of the “Institute for Common Prosperity and Development” at Zhejiang University, stated in a speech at Peking University at the end of March this year that China faces two major challenges in promoting “common prosperity”: “making a big cake” and “sharing the cake.” This has attracted widespread attention.
On May 4th, the English version of the Hong Kong-based newspaper “South China Morning Post” quoted Li Shi’s research findings, stating that Li Shi has rare insights into the economic distribution beyond official statistics.
Li Shi emphasized that the focus of “common prosperity” lies in the wealth of the people themselves, not the strength of the national economy. However, China’s Gini coefficient measuring the wealth gap has surged from 0.45 in 1995 to over 0.7 in 2023, highlighting the worsening phenomenon of unequal wealth distribution and the daunting task of “sharing the cake”.
This discrepancy is far from the official claim of gradual narrowing of the gap.
On the other hand, the momentum of “making a big cake” in China is significantly weakening. Data shows that the economic growth rate has dropped from 8%-10% fifteen years ago to around 5% currently; the growth rate of residents’ incomes has also declined from 8% between 2013-2018 to less than 5% between 2018-2023. The income growth of low-income groups is even less than 2%.
Li Shi admitted that “the scale of low-income groups in our country is unexpectedly large.” According to surveys, around 300 million people had a monthly income of less than 1000 yuan in 2021, and nearly 98 million people had a monthly income of less than 500 yuan. In addition, residents’ consumption has been stagnant for a long time, still lower as a share of national income compared to 2004 levels.
He emphasized that the current situation of “slowing income growth, weak consumer demand, declining investment momentum, and employment pressure” is particularly significant for the middle and low-income groups.
Regarding the huge gap between the official announced Gini coefficient (approximately 0.47) and the estimate by Chinese scholar Li Shi (over 0.7), experts believe it is a result of political manipulation.
Commentator Tang Jingyuan told The Epoch Times that the official statistics bureau in China is the “bureau of numbers,” and when it comes to key data affecting “maintaining public opinion stability” such as the Gini coefficient, the authorities are bound to engage in large-scale falsification, even reputable scholars and experts within the regime receive manipulated data.
American financial scholar Huang David dissected the reasons for data distortion from three perspectives: first, the enormous bureaucratic “gray income” has never been included in statistics. For example, a department-level leader may possess billions to tens of billions in assets, but in statistics, only a monthly salary of a few thousand yuan is recorded.
Secondly, the sample has a double bias. Huang David pointed out that the official sampling only covers the general wealthy and the bottom-end laborers, excluding the vast middle class; moreover, the samples are highly concentrated in cities, overlooking the vast rural and mountainous areas.
The third perspective is “political flattening.” The internationally recognized standard places the Gini coefficient at 0.4 as the warning line, and 0.5 as the “red line of riots,” while the Chinese Communist Party has long fixed the number at 0.47.
Huang David believes this is a cleverly calculated political operation by the authorities, acknowledging the large wealth gap domestically while signaling externally that the “problem is under control.”
Regarding the authorities’ promotion of “common prosperity,” Tang Jingyuan told The Epoch Times that fundamentally, it is a “policy issue” caused by significant deviations in the policies enacted by the Chinese Communist Party.
“In essence, this is going back to the route of Mao Zedong. Heading towards universal poverty, planning economy, and the economic model of communal dining.”
Tang Jingyuan analyzed that the current abnormality in the Chinese economy lies in the disconnect between the “production end” and the “distribution end”: while the production end maintains a “market economy” model, when it comes to distribution, the CCP forcibly takes the “larger share” through a “planned economy” approach.
He backed his viewpoint with data, pointing out that the government and large enterprises have increased their share in national income, while the share of household income has significantly decreased.
Tang Jingyuan described the reform and opening-up era as a half-market economy of “watering and raising fish,” which has now entered a mode of “draining the pond to catch fish.” He believes this is the fundamental reason for the exacerbation of wealth disparity because “the ruling class of the CCP has allocated a larger share to themselves during the ‘sharing of the cake.'”
American economist Huang David, in an interview with The Epoch Times, analyzed the underlying logic of the distribution system in China: wealth creation comes from “marketization,” but the distribution and flow of wealth are controlled through “administration.”
“Wealth is the result of collective efforts of society, it is a market-based outcome. But distribution is not based on market mechanisms, but is distributed by government officials, or administratively,” he said.
In a normal society, secondary distribution is regulated through taxation and social welfare – those with higher incomes pay more taxes, while those with lower incomes enjoy more welfare. However, this is entirely different in China.
Huang David pointed out that the Chinese authorities prioritize fiscal funds for government and party operations, stability maintenance, and high-weight foreign diplomacy such as aid to Asia, Africa, Iran, the Taliban, and others above the well-being of the people.
In his view, the wealth structure in China has become institutionalized. True wealth can only be found in state-owned enterprises’ monopoly operations and in the hands of privileged classes, “simply put, it is held by the ruling class.”
Huang David criticized that the so-called “three distributions” of “common prosperity” do not require the privileged class to give up their assets but, within the non-privileged class, it involves transferring assets from legitimate private enterprises through “non-institutionalized appropriation” to the poor, lightening the social security burden the government should bear.
Using the example of a social output of 100 yuan, he elaborated that the government first takes 80 yuan through political means, and then forcibly distributes the remaining 20 yuan from more profitable enterprises to subsidize poorer individuals.
In this structure, the plight of ordinary people is extremely difficult. Huang David used the term “labor miners”, believing that the term “human miners” is no longer sufficient to describe the current situation.
People are discovering that their hard work is being exploited as “meat miners,” as their assets (with real estate representing 70% of the average family’s wealth) are shrinking while debts continue to accumulate.
Under the dual pressure of entrenched distribution structures and privileged exploitation, the younger generation in China is undergoing an ideological collective shift. Tang Jingyuan observed that “lying flat” has become the life philosophy and ideology embraced by today’s younger generation.
In an interview, he stated that “lying flat” is not passive idleness but a collective rational response of the people to the systemic “exploitative structure,” believing that since the value created through hard work will mostly be taken by the red-color elites, working harder is meaningless.
Tang Jingyuan emphasized that this social issue has received high attention and is the most taboo topic for the authorities, “because it precisely reveals the problems within the CPC system.”
Huang David also held a similar position, believing that the dilemma of “common prosperity” is not due to a lack of funds but because the ruling class holds on to their party-state interests.
He mentioned that the self-reported foreign aid by the CCP annually amounts to around 1.2 trillion yuan, stating, “This amount of funding is sufficient to run all of China’s medical and social security, all so-called social security services,” and when considering aid to Hamas, North Korea, the Taliban, etc., the total is estimated to be around 3-5 trillion annually. However, the CCP would rather spend this on political goals than invest in the well-being of the people.
Amidst the entanglement of a rigid system, solidified wealth, and stagnating growth, the CCP’s slogan of “common prosperity” is drifting further away from reality.
Tang Jingyuan concluded, saying, “The CCP system, in fact, is the root cause of almost all major social crises and contradictions in China. Only when this system disintegrates, can these crises be resolved.”