1. Does Inequality Matter in China? Lina Song University of Nottingham

2. Outline (1)How unequal is China? (2)Is income inequality a very serious problem? (3)To what extent does inequality matter?

3. China gini coefficients over time 198819952002 China 39.546.946.8 45.245.0 with Migrants44.8 Rural 32.536.436.5 Urban24.433.932.2 Source: CHIP (Gustafsson et al, 2007)

8. Comparison GDP (PPP) per capita: - No. 87 of 181countries, $7198 Human Development Index: - No. 81 out of 177 countries, 0.768 Gini coefficient: - No. 92 out of 126 countries, 44.7

9. S. Huntington (1968) "Political Order in Changing Societies", New Haven and London: Yale University Press, P55 Social Mobilisation ----------------------------------=Social Frustration(1) Economic Development Social Frustration --------------------------------=Political Participation(2) Mobility Opportunities Political Participation --------------------------------=Political Instability(3) Political Institutionalisation

10. Reactions towards the “economic inequality” - does inequality matter? Alternative indicators to measure wellbeing Political instability Regional Disparities - linked to regionalism Industrial actions Increasing crime rate Social frustration -> discontent -> socio-political disorder

11. Testing hypothesis determining discontent Social discontent =F [economic development, social mobilisation*, absolute economic deprivation, relative deprivation (income inequality), political participation, community involvement (social capital), Inspirations / mobility opportunity, Adaptations to modernity) + control factors: personality, health, personal characteristics, household, regional characteristics + error term (unobservable) ]

12. Data The data used for this research were purposively designed by the authors, administered by researchers at the Institute of Economics, Chinese Academy of Social Sciences, and conducted by the National Bureau and Statistics (Guannian, 2002). The survey was linked to the 2002 Urban Household Income Distribution Survey (CHIP, 2002). 7000 individuals were randomly sampled from 71 Chinese cities out of 12 provinces covering all geographical regions and administrative levels of China.

15. Regression of overall satisfaction on satisfaction with specific aspects of life Satisfaction over the following aspects: coefficientT-statistics Income: Current household income 0.083 5.95*** Income compared with the people you know 0.075 5.78*** Income compared with what you earned before 0.15710.48*** Occupation and social status: Current occupation -0.008-1.01 Current social status 0.049 4.35*** Career achievement/personal development0.10710.59*** Opportunities and social mobility: Chances for job promotion 0.00005-0.01 Chances for getting your talents /skills appreciated 0.0889.75*** Opportunities for training -0.026-3.65*** Job security -0.008-0.92

16. Welfare provision: Economic security in old age 0.0162.28*** Current housing conditions 0.1169.23*** Means of transportation 0.0000.05 Government policies General impact of state policies on your family 0.0283.55*** Current price of basic foods 0.0735.12*** Current price of basic daily needs (clothing and daily goods) 0.0332.45*** Public infrastructure of the city 0.0655.37*** Current level of pollution 0.00040.04

17. Family and social connections: Social relations with others (guanxi) 0.0222.7*** Family life, marriage and relationships 0.0303.45*** Spouse’s current income -0.002-0.18 Spouse’s current occupation -0.020-2.04*** Spouse’s current social status 0.0586*** Spouse’s current achievements 0.0252.22*** Intercept0.0320.57 Adjusted R square0.371 F-value172.57 Number of Observations6977

18. Modelling discontent / instability (testing key hypothesis) Dependent variable: S = personal level of discontent; Key variables to be tested: income growth; absolute income; unemployment + all observed variables

19. Very satisfied Satisfie d Not so satisfie d Not satisfie d Very dissat isfied Baseline0.6%39.8%46.8%10.6%2.3% Not deprive (current income > past income)0.6%40.8%46.3%10.2%2.1% Deprive (current income < past income)0.4%36.4%48.3%12.1%2.8% Log (household income per capita) if doubled0.9%46.2%43.3%8.1%1.5% Currently employed0.6%40.0%46.7%10.5%2.2% Currently unemployed0.3%30.1%50.2%15.3%4.2%

20. Type of medical Insurance: Covered by state medical insurance0.7%41.8%45.8%9.8%2.0% Serious illness- coverage (self-paid by proportion)0.5%38.1%47.6%11.4%2.5% Commercial self- purchased medical insurance0.4%36.6%48.2%12.0%2.8% No medical insurance0.3%30.6%50.1%15.0%4.0% Very satisfi ed Satisfi ed Not so satisfi ed Not satisfied Very unsatisfied Baseline0.6%39.8%46.8%10.6%2.3%

21. Very satisfiedSatisfied Not so satisfied Not satisfied Very unsatisfied Baseline0.6%39.8%46.8%10.6%2.3% Political participation and affiliation: Not interested in political affairs0.5%37.9%47.6%11.4%2.5% Interested in politics affairs0.8%44.1%44.5%8.9%1.7% Communist Party/League members0.7%41.8%45.8%9.8%2.0% Other political Party members0.5%38.6%47.3%11.1%2.4% Not affiliated to any political Parties0.5%38.4%47.4%11.2%2.5%

23. Summary of Free House World Map Description: The Map of Freedom reflects the findings of Freedom House's 2006 survey Freedom in the World (PDF). Freedom in the World is an annual institutional effort that monitors the gains and losses for political rights and civil liberties in 192 nations and 18 related and disputed territories. For each country, the survey provides a concise report on political and human rights developments, along with ratings of political rights and civil liberties. Based on these ratings, countries are divided into three categories: Free (green), Partly Free (orange), and Not Free (red), as reflected in the Map of Freedom. Freedom HouseFreedom in the World (PDF) In Free countries, citizens enjoy a high degree of political and civil freedom. Partly Free countries are characterized by some restrictions on political rights and civil liberties, often in a context of corruption, weak rule of law, ethnic strife, or civil war. In Not Free countries, the political process is tightly controlled and basic freedoms are denied.

27. Conclusion: does inequality matter? Absolute poverty (in relation to growth) Unjust - market segmentation, entitlement, Socio-political disorder Why income inequality has become a primary issue now, not in 1995?