4. Xi Jinping Confronts Inequality: Bold Leadership or Modest Steps? | The Xi Jinping Effect

`4` Xi Jinping Confronts Inequality Bold Leadership or Modest Steps?

Martin King Whyte

Despite China’s extraordinary success over the past four decades in launching an economic development boom, today that country faces daunting challenges. High on most lists is the need to combat income inequality. China’s economic boom has been a primary contributor to that society’s transformation from having relatively modest income gaps to becoming one of the most unequal countries on the planet.¹ The fairly uniform poverty of the late Mao Zedong era has given way to China early in the Xi Jinping era having more dollar billionaires than the United States, many of them living in lavish, gated mansions and jetting off on overseas investment forays and vacations even as tens of millions of their fellow citizens continued to live in abject poverty.²

Is rising income inequality a danger and, if so, why? The existing literature contends that large income gaps are problematic in any society for a variety of reasons—for example, economic demand will be weak because rich people spend less of their incomes than the poor, economic productivity will be low if most laborers are poorly compensated, and the low human capital of the poor will make them a burden on society. However, the major danger worried about in China is that rising income inequality will increase popular perceptions that the social order is unfair, provoking feelings of injustice and anger that will fuel social protest movements that threaten Chinese Communist Party (CCP) rule. As Xi Jinping took over leadership of the CCP in 2012, BBC journalist Damian Grammaticas summarized the challenge he faced: “So the job of making China a fairer place will now fall to the Communist Party’s next generation of leaders, who will rule the country for the next 10 years. The fear is that China’s growing inequities could undermine the legitimacy of their one-party rule, and the more unequal China becomes, the more unstable it may be.”³

Upon examination, the potential threat of political instability arises from growing feelings of inequity, not from any particular level of income inequality per se.⁴ If Chinese citizens feel that current levels of income inequality are mostly fair, with the gap between high and low incomes deserved, then they are unlikely to develop strong feelings of distributive injustice. National China surveys I directed indicate that the continuing strong income gains most families have enjoyed during the reform era have kept ordinary Chinese from getting very angry about distributive injustice, at least as of the opening years of Xi Jinping’s leadership.⁵ Nonetheless, for at least two decades China’s leaders and many analysts have argued that if income inequality continues to rise, feelings of inequity will inevitably multiply, eventually leading to a “social volcano.” In the first decade of the new millennium, it was common to see claims that surpassing a national income inequality Gini index of 0.40 (which had already occurred by about 1990) indicated that China had entered a “danger zone” for political instability, and a poll of senior officials conducted by the Central Party School in 2004 ranked China’s rising income gaps as that society’s most serious social problem, ahead of corruption and crime.⁶

At least since the tenure of CCP leader Jiang Zemin (1989–2002), the post-1978 sharp rise in income inequality has been considered a serious problem that needs to be addressed and reversed through new programs and public policies. Jiang’s 2000 campaign to “develop the West” and the “harmonious society” programs of his successor, Hu Jintao (2002–12), were intended to shift China onto a more equitable development path.⁷ However, as Hu was succeeded by Xi Jinping, there was considerable skepticism that any progress had been made in reversing rising income inequality, and many saw Xi Jinping as a more dynamic leader who might finally be able to make progress toward that goal. His years in the countryside as a sent-down youth in Shaanxi (1969–75) and later as a county CCP official in Hebei (1982–85) were seen as giving Xi special awareness of the plight of China’s rural poor. These expectations seemed borne out in February 2013, soon after Xi took over, when China’s State Council announced a comprehensive thirty-five-point blueprint for combating rising income inequality.⁸

What have been Xi’s specific efforts aimed at combating rising inequality, and how bold versus modest have they been? What evidence do we have about trends in income inequality in China in recent years, and has the trend toward rising gaps been reversed? What do we know about how satisfied or angry ordinary Chinese citizens are about current patterns of inequality, and how much desire do they have for their government to do more to combat rising income gaps? After attempting to answer these questions, this chapter concludes with a response to the query posed in the chapter title and with thoughts on the challenges facing Xi Jinping and his eventual successors.

Before launching into this overview, a caveat is necessary. When I began to research Xi Jinping’s role in combating inequality, it was generally assumed that Xi Jinping would abide by the newly established precedent of China’s top leader serving two terms of five years each and then stepping aside. If that had been the case, it should have been possible to arrive at a final assessment of Xi Jinping’s role in addressing income inequality (and in realms addressed in other chapters in this volume) by late 2022. However, Xi Jinping broke precedent by starting a third five-year term as CCP leader in October 2022, with some analysts predicting he will continue as leader even beyond 2027. In addition, toward the end of Xi Jinping’s second term, important changes occurred that make reaching definitive conclusions about Xi’s record even during his first two terms problematic. In particular, the onset of the COVID-19 pandemic early in 2020 and the zero tolerance lockdowns that had China in turmoil at the start of Xi’s third term have had complex effects not only on China’s economic development but also on patterns of inequality and popular attitudes toward distributive injustice issues. These same years have seen further tightening of controls over communications and freedom of expression and the spread of high-technology surveillance systems, making access to information more difficult. The full impact of these developments will not be clear for some time. Therefore, the bulk of this chapter will focus on policies and trends in regard to income inequality primarily in the years between 2012 and 2019, with tentative and somewhat speculative concluding comments about the period since then.

Xi Jinping Confronts Inequality: Specific Initiatives

Although the government’s 2013 blueprint for reducing income inequality seemed to indicate that this was a high priority for Xi Jinping, in reality this plan received very little publicity subsequently and soon disappeared from view. It is apparent that Xi Jinping did not wish to be associated with concrete plans for combating inequality developed by his predecessors, Hu Jintao and Wen Jiabao. However, if one examines specific initiatives undertaken under Xi, they might be seen as constituting a substantial, multipronged effort to attack income inequality. To simplify this review, these initiatives will be grouped into three categories: efforts to lower the top and raise the bottom of China’s income ladder, efforts to spread social safety net programs more broadly, and efforts to make it easier for rural Chinese to gain full citizenship rights in cities. In the pages that follow, details regarding initiatives in each category are reviewed.

Lowering the Top and Raising the Bottom of China’s Income Ladder

Xi Jinping is noted for two major programs related to inequality: his campaign against official corruption and the pledge to wipe out extreme rural poverty in China by 2020. If fewer Chinese are joining the ranks of the ultrarich by corrupt means (or having their ill-gotten gains confiscated) and more Chinese are being lifted out of poverty, the result should be some reduction in overall income inequality. However, it is doubtful that these campaigns represent an effective response to rising income gaps.

THE CAMPAIGN AGAINST CORRUPTION

Obviously, the primary goal of the anti-corruption campaign is not to reduce inequality. Some skeptics claim that the main goal is not even to attack official corruption, but rather to eliminate Xi’s political rivals. Even if one takes the campaign at face value, it is next to impossible to estimate what the resulting consequences for China’s income distribution have been or will be. In addition to the direct effects in terms of confiscating the wealth of corrupt “tigers” targeted by the campaign, there are doubtless many hard-to-measure indirect effects as well—new investments not made and businesses not started or shut down, wealth invested abroad, restaurant banquet trade made less profitable, luxury goods attracting fewer customers, and so on. Still, it is hard to see much visible impact on China’s “conspicuous consumption” culture, the boom in overseas tourism (prior to the pandemic), the rise in the costs of urban housing, increases in the number of Chinese millionaires, and so forth.

If Xi Jinping and his colleagues were serious about limiting the role of the growing wealth of China’s ultrarich in aggravating income inequality, they would implement more direct and systematic redistributive measures, and currently these remain weak in the Chinese system. Progressive income taxes are paid by a relatively small number of Chinese citizens, and such taxes play a limited role in financing the Chinese government and its programs. And property taxes on family assets such as housing have been under consideration for years but appear to remain stuck at the pilot stage in only a few cities and facing considerable resistance.⁹ Assets have become an increasingly important source of family incomes in recent years, and ownership of housing has been the most rapidly growing source and is by far the most important component of family wealth, so not having a comprehensive system of property taxes, not to mention capital gains and inheritance taxes, obviously means that the contribution of family wealth disparities to overall income gaps can continue to grow relatively unchecked.¹⁰

THE CAMPAIGN TO ELIMINATE EXTREME RURAL POVERTY

The implications for income distribution of Xi’s campaign to eliminate rural poverty by 2020 are more direct. And it is true that Xi regularly stressed the importance of this goal, telling Chinese officials they must “finish the journey” and travel the “last mile” to finally eliminate extreme rural poverty.¹¹ It is also clear that the campaign to eliminate poverty became increasingly focused over the years (shifting from policies aimed at poverty-stricken counties to poor villages, and then to individual poor households) and employed a widening array of tactics in this effort (shifting from trying to stimulate development projects and tourism to increased funding for rural schooling, health care, livelihood payments, and rural pensions; requiring rich cities and enterprises along the coast to aid development in specific poverty-stricken locales; as well as increasingly employing mandatory resettlement to move poor villagers into housing on the outskirts of cities).¹² Late in 2020 it was announced that the campaign goal had been achieved, followed by official propaganda touting this as a personal triumph for Xi.¹³ But how much credit Xi deserves in the battle against poverty is open to question on a number of grounds.

First, efforts to reduce poverty have had a high priority throughout the reform era. When Deng Xiaoping was in charge, his post-1978 market reforms were justified as a way to lift citizens out of the abject poverty in which Mao Zedong had left them. Deng and his colleagues were convinced that continuing to follow Soviet-style state socialist economic development might produce growing national strength at the expense of popular living standards, while switching to a Japanese-style export-promoting development model could dramatically improve living standards as well as raise China’s gross domestic product (GDP). In urging some Chinese to get rich first, Deng indicated his conviction that Mao’s mandated limits on material incentives and consumption had hindered China from developing, while market reforms would produce benefits for much of the population even if they also resulted in wider income gaps.

So the goal of reducing the proportion of the population living in poverty is hardly new, but dates back to the 1980s. The sharpest reductions in the incidence of poverty occurred during the very earliest years of the reforms, with continuing reductions in subsequent decades so that the number of Chinese living in poverty declined from about seven hundred million in 1978 to around seventy million in 2014, according to one analysis.¹⁴ So most of the reduction in extreme poverty, from seven hundred million down to perhaps one hundred million, occurred prior to Xi Jinping assuming the leadership.¹⁵ Furthermore, analysts agree that the primary driver of this dramatic reduction in the incidence of poverty was booming economic growth, rather than the government’s anti-poverty programs.¹⁶ Even though the latter programs provided some income relief and comfort to the poor Chinese affected by them, they didn’t make it possible to reverse the national trend toward growing income inequality prior to 2010, as indicated earlier.¹⁷

Xi Jinping could reasonably argue that because the numbers of poor people in China had already been reduced so dramatically, lifting the remaining millions out of that state would be more difficult because these would primarily be residents of remote locales and people with very low levels of human capital, backgrounds that would make it difficult for them to become prosperous.¹⁸ But just as reasonably, since the pace of economic development has slowed on Xi’s watch, the anti-poverty engine that growth represents has become weaker.¹⁹

In sum, Xi Jinping can be credited with continuing to focus on the problems of rural poverty in China and making further headway in an already impressive record of accomplishment under his predecessors, mainly resulting from China’s booming economy. But despite the attention his pledge has received, there is little that is particularly new or different on this front since Xi Jinping took charge beyond increased funding and administrative effort.

Xi Jinping’s campaigns to attack corruption and eliminate severe rural poverty do not, on balance, reflect a bold or effective effort to reduce China’s high levels of income inequality. Near the close of his second term, in August 2021, Xi Jinping announced to much fanfare a third campaign, a drive for China to pursue “common prosperity,” with publicity suggesting the launching of a more comprehensive and effective set of policies to reduce income inequality. A preliminary assessment of the “Common Prosperity” campaign will be deferred to later in this chapter.

Spreading Social Safety Net Programs and Public Goods Access to Disadvantaged Chinese

The second category of efforts to attack inequality involves initiatives that can be characterized as an attempt to transform China into more of a fully developed welfare state. These initiatives involve extensions of social safety net programs and public goods access to the majority of Chinese who did not previously have access to them. To set these programs in context, it is necessary to review the historical record.

While Mao Zedong is often regarded as a great egalitarian, the social order he and his colleagues constructed during the 1950s and maintained even through the Cultural Revolution was in fact highly unequal. Income and social class ceased to play important roles in determining the living standards and opportunities of citizens, to be sure, but where they were born and the communities and employing organizations where they lived and worked played crucial roles. Before 1949, China’s Nationalist government introduced the beginning elements of a welfare state, with access to health insurance, maternity leave, pensions, and much else depending on where and for what organization a person worked within privileged sectors of society. After 1949, Mao and his colleagues built upon this foundation, leading to highly varying opportunities and entitlements for socialist citizens.²⁰ Even for the minority in the Mao era who were urbanites, there were clear differences in incomes, housing, benefit coverage, and much else between those who worked in high-priority state organizations and enterprises in major cities and those employed in local firms and collective enterprises in smaller cities and towns.²¹ The majority of Chinese, the more than 80 percent who then lived in the countryside, were not eligible for any of the welfare state entitlements and public goods their urban counterparts enjoyed, relying instead on the meager resources of their communes, brigades, production teams, and families while bound to the soil in a system that can be characterized as “socialist serfdom.”²²

China’s market reforms after 1978 and the dismantling of the commune system in the countryside by 1982 made China’s system of benefits tied to employing organizations less viable. In the closing years of the twentieth century, and then increasingly in the new millennium and progressing further under Xi Jinping, China launched multiple efforts to extend welfare benefits and social safety net programs to more of the population and to move toward making eligibility for, and coverage by, those benefits less dependent on the employer and sectoral differences that had been emphasized in the socialist era.²³

MINIMUM LIVELIHOOD PAYMENTS

China enacted a system of minimum livelihood payments (commonly known as the dibao system) in 1999 to provide minimal government payments to families whose incomes fall below officially designated poverty thresholds. The program had been piloted in Shanghai starting in 1993 and was initially limited to poor families with urban hukou (household registrations). A few years later, experiments began at extending dibao payments to rural families as well, and these evolved into a nationwide rural dibao program starting in 2007. From that year forward, the number of rural dibao recipients exceeded the urban total, reaching peaks of 23.5 million urban recipients in 2009 and 53.9 million rural recipients in 2013, after which the numbers of recipients on both sides of the rural-urban divide declined.²⁴ Initially, the average urban dibao recipient received more than three times the amount of the average rural recipient, but increased state funding on the rural side reduced the ratio to close to 2:1 by 2016 (although rural dibao levels remained too low to live on).

The Xi era coincides with increased funding for the rural side of the program, even as dibao funding for urban recipients stabilized and then declined.²⁵ Other changes in the dibao program include requiring able-bodied but unemployed recipients to seek work and leave the program as well as combating unfairness in the system—both families who should be receiving dibao funds but are not and those who are receiving dibao payments even though they are not eligible.²⁶ In sum, Xi Jinping should be credited with some increase in dibao funding for rural residents and with improvements in administration, although with some retrenchment in the dibao coverage rate.²⁷ But the main credit for developing and extending the program belongs to his predecessors.

EXPANDING AND CONSOLIDATING MEDICAL INSURANCE COVERAGE

Early in the reform era the medical insurance systems of the Mao era were dramatically cut back, with most Chinese having to pay medical bills out of pocket and facing ruin if they needed expensive medical care. According to the national China surveys I directed, in 2004 only 29 percent of Chinese adults had public medical insurance coverage, with 50.8 percent of urban hukou respondents covered, but only 15.4 percent of rural respondents and 9.2 percent of rural-urban migrants. In response to a sense of crisis regarding China’s medical care system, a major national campaign was already underway starting in 2002 to construct a new system of village cooperative medical insurance programs, funded by a combination of individual premiums and government subsidies, as well as to increase coverage for other segments of the population. The impressive results of this high-priority effort can be seen in the figures from all three China Inequality and Distributive Justice Project (CIDJP) surveys, spanning the years from 2004 through 2014, displayed in table 4.1. Only five years later, in 2009, overall coverage by public medical insurance had risen dramatically to 82.4 percent, with rural respondents then surpassing the coverage rates of urban hukou respondents (temporarily). Five years after that, in 2014, public medical insurance coverage had become almost universal, at over 93 percent coverage, with only migrants trailing behind, at 86.7 percent.

TABLE 4.1. Public health insurance coverage (%)

	2004	2009	2014
Rural	15.4	89.6	94.0
Urban	50.8	75.2	94.2
Rural migrants	9.2	56.1	86.7
Total	29.0	82.4	93.4
Number of responses	3,250	2,878	2,384

Source: China Inequality and Distributive Justice Project surveys.

However, because this expansion was constructed based on China’s long-standing administrative system, there were until recently three primary medical insurance systems: one for those employed in urban enterprises and organizations (Urban Employee Basic Health Insurance, or UEBHI), one for other urban hukou citizens (Urban Resident Basic Health Insurance, or URBHI), and one for villagers and rural-urban migrants (New Cooperative Medical Scheme, or NCMS). Major differences in coverage and benefits and also reimbursement rates existed across plan types, as well as across localities within plan types, and many Chinese had to continue to live with fairly minimal coverage even though they were no longer uninsured. One study reported that in 2014, more than 30 percent of the health expenditures of Chinese families remained out of pocket, rather than being covered or reimbursed by insurance.²⁸ One further complexity of this hybrid system is that most rural-urban migrants who had health insurance (72.1 percent in the 2014 survey) remained covered by the NCMS plans in their villages of origin, rather than by the plans of their current urban employers. The spread of medical insurance coverage did not reduce the urban-rural disparities in medical care availability and quality, which research indicates remain very substantial.²⁹

Although the expansion of public medical insurance coverage to most of the population was launched and primarily achieved under his predecessors, Xi Jinping can be credited with efforts to improve the levels of coverage and reimbursement rates as well as to begin to administratively consolidate the different systems. Specifically, after 2014 the two less generous legs of China’s health insurance tripod, the URBHI and NCMS, were merged, a development that should simplify the lives of migrants in seeking medical treatment and reimbursement.³⁰ Xi Jinping, even though he is only building on the progress in health-care coverage accomplished by his predecessors, deserves some credit for pushing the process along.

EXPANDING PENSION COVERAGE

The story of efforts to expand pension coverage mirrors what happened regarding medical insurance. During the Mao era, urbanites employed by state-owned enterprises and governmental organizations received fairly generous pensions after they retired without having to make contributions during their working lives. Employees of urban collective enterprises (roughly 20 percent of the urban labor force then) received more modest pensions or more often onetime retirement payments. But the vast majority of Chinese—not only villagers but urbanites without regular jobs in state or collective firms—had no pension coverage.

In the reform era a number of changes of the existing system were enacted, particularly by pooling pension funds by sector and city, thus removing the direct financial connection between retirees and the organizations that had employed them. In 1997, a major reform of the urban pension system was enacted that required employees of state-owned enterprises (but not government agencies) to make regular financial contributions into their individual pension funds and also created similar contributory pension programs for urban private firms to cover their regular employees with urban hukou. In all of these plans (collectively referred to as the Urban Employee Pension System, or UEPS), participation was essentially mandatory, making eventual pension payments to those covered universal.

During the 1990s, pilot experiments began with extending pensions to rural residents. However, it took almost two decades before a national program of rural pension coverage was enacted in 2009, with pensions funded by a combination of individual and family contributions and government subsidies. Two years later, in 2011, a similar system of pensions was introduced for urbanites not employed in urban units covered via the UEPS. Both the New Rural Social Pension Scheme (NRSPS) and the Urban Social Pension Scheme (USPS) involve voluntary participation and regular contributions from participants or their families, and in the NRSPS the basic pension at one point was said to be only ¥55 per month, which is far below any reasonable local poverty line. Nonetheless, coverage in the new plans has grown rapidly, and by 2011 there were more people covered by the NRSPS than by the UEPS, with more than three hundred million covered by each.³¹ Despite this expansion, the voluntary nature of rural pension plan participation and the requirement of regular contributions over the years (at least fifteen) mean that pension coverage has not become as close to universal as coverage by medical insurance. In the CIDJP surveys, only 20 percent of respondents were covered by pensions in 2004. In 2009, this had increased slightly, to 25.9 percent, and by 2014 it was up to 48.5 percent, so still more than half of Chinese adults were not covered then, although probably pension coverage has increased since.³²

From the dates listed it is clear that the major steps to spread pension coverage occurred prior to Xi Jinping coming to power. As with medical insurance, Xi can be credited with a decision to merge the NRSPS and USPS into a single plan after 2014, and perhaps with increasing government subsidies for this merged weaker variant of the Chinese pension system, thus raising the overall participation and coverage rates. However, the development and spread of pension coverage to rural residents as well as urbanites without formal employment has done little to counteract the way pension incomes aggravate income inequality in China today. As one recent report notes, “China’s largest single transfer program—pensions—are very unequally distributed. Pensions, which on average account for more than 10 per cent of household income in China, go overwhelmingly to a minority of the population—urban retirees.”³³ So Xi Jinping has continued to build upon the efforts of his predecessors, but to date these efforts have done relatively little to counteract a major contributor to overall inequality—pension incomes.

EASING AND EQUALIZING ACCESS TO ADVANCED EDUCATION

A final front of efforts to reduce inequality in the distribution of public goods concerns access to schooling, particularly advanced schooling. Again some historical context is needed. China made impressive progress during the Mao era toward eliminating illiteracy and extending basic schooling to all youths. Toward the end of that period there was even movement toward reducing the rural-urban gap in upper middle school attendance, with 18 million enrolled in upper middle schools in 1977 (although one may question the quality of schooling in the wake of the Cultural Revolution). But as the reforms were launched, there were sharp drops in upper middle school enrollments, to only 9.7 million in 1980 and 6.3 million in 1983, overwhelmingly due to a surge of dropouts and school closures affecting rural high schools.³⁴

Subsequently, there was a gradual rebound in upper middle school enrollments, but until fairly recently, schooling opportunities for rural hukou and urban hukou youths increasingly diverged. In 1986, a national goal of universalizing attendance through lower middle school was mandated, with nine years of schooling considered compulsory. However, it remained difficult for rural hukou youths to progress on to upper middle school, much less college, while it became increasingly easy for urban hukou youths to do so.³⁵

For many years children of rural-urban migrants were barred from attending urban public schools at all levels unless the family paid high fees. Even after 2006 when urban public schools were told they should allow migrant children to enroll without paying special fees, in large cities migrant families have generally still faced stiff barriers when trying to enroll their children in public schools. Local hukou youths have priority, and many cities use points systems (based on parent education, employment tenure, homeownership, and so forth) that make it difficult for most migrant families to qualify.³⁶ Even if migrant children are able to enroll in urban public schools, they are generally able to continue only until lower middle school graduation, the endpoint of compulsory schooling. If they want to proceed further, they have to return to the place of origin of their parents and apply for admission to rural upper middle schools, which generally require them to attend as boarders, and to pay tuition as well as room and board fees.³⁷ And in many of China’s large cities the pendulum has swung backward since 2014, with major drives to close private migrant schools and raise the entry bars for access to public schools as a way to induce migrants to depart and thus reduce the overall urban population.³⁸

The sixty million or more “left behind children” of migrants as well as rural children whose parents didn’t migrate have had to cope with the limited and often distant availability and extra expenses of upper middle schooling, obstacles not faced by urban hukou youths. Due to the bottleneck in rural upper middle schooling, when Chinese university enrollments were rapidly expanded after 1998, with perhaps nine to ten times as many enrolled today as in 1997, the beneficiaries were overwhelmingly urban hukou youths.³⁹

The results of these discriminatory policies are clearly visible in the relatively low levels of high school educational attainment in China compared with other middle-income developing countries. One study based on comparative census data reports that in 2015 only 30 percent of the Chinese labor force had any high schooling (that is, upper middle schooling), compared with 35 percent in Mexico, 37 percent in Turkey, 42 percent in Argentina and South Africa, and 47 percent in Brazil, not to mention the 78 percent average in member countries of the Organization for Economic Cooperation and Development.⁴⁰ The role of the hukou system in this poor performance is seen in a related analysis based on China’s 2015 micro-census, which revealed that in 2005 90 percent of fifteen- to seventeen-year-old urban hukou youths had at least some high schooling, but only 43 percent of comparable rural youths did.⁴¹

China’s leaders now recognize that to rise into the ranks of rich countries, they cannot rely on the human capital of urban youths alone. For more than a decade China has been embarked on a campaign to expand upper middle school enrollments in rural areas and to provide funds to make it easier for rural youths to complete at least that level of schooling, and perhaps college as well. The results of that campaign are striking. By 2015, the urban-rural high schooling gap had closed significantly, with 97 percent of urban youths having had some high schooling in comparison with 77 percent of rural youths.⁴² However, much of the increase in upper middle school enrollments, particularly in rural areas, is in rapidly expanding and subsidized vocational and educational training (VET) schools, rather than academic high schools. In addition to the fact that VET schools are terminal, rather than preparing students for college, available research indicates that these schools provide poor-quality learning, have higher dropout rates than rural academic high schools, and generally do not lead to jobs after graduation any better than could have been obtained without a VET diploma.⁴³ So there has been dramatic improvement, but rural-origin youths are still shortchanged educationally.⁴⁴ And the most reasonable and cost-effective way of increasing the educational opportunities of rural-origin youths, by making enrollment in urban public schools available to all resident youths, has continued to be rejected in China’s larger cities in the Xi era.

On the schooling front it is uncertain how much credit Xi Jinping deserves for the improvements in access to the higher levels of schooling that have occurred. The dramatic expansion of university education in China was launched under Jiang Zemin, and the drive to relieve the bottleneck in high schooling in rural areas began under Hu Jintao. Both initiatives have been continued by Xi Jinping, but it is not clear that he has added much that is new or has increased the pace of closing the urban-rural gap, and in the largest cities inequalities in access to advanced education have increased on Xi’s watch.⁴⁵

EXTENDING SOCIAL SAFETY NETS: SUMMING UP

China has made impressive progress both before and under Xi Jinping’s leadership in extending social safety net coverage to more of the population and in starting to overcome the legacy of decades of severe discrimination against Chinese of rural origins. But Xi has not boldly broken new ground regarding any of these programs. How much further progress toward inclusion and equal benefits will occur remains to be seen, and on this question China faces serious challenges. Spreading social safety net coverage to previously disadvantaged groups is one thing, but extending coverage does not mean providing equal benefits, which is very far from being the case currently. To eventually move toward equalizing benefits for all Chinese would be a very expensive proposition.⁴⁶

Some research indicates that China may recently be moving backward, away from universal inclusion and equal social welfare benefits, rather than continuing forward. Since roughly 2010, China has experienced slowed growth in formal employment and rapid growth in the numbers of Chinese in informal employment, leading to growing wage polarization.⁴⁷ This polarization may mean that workers who lose or leave formal employment and end up in low-level, informal sector jobs will have their coverage and benefits in medical insurance plans, pensions, and so forth reduced or lost.

China’s Urbanization Plan and the Effort to Phase Out Hukou-Based Discrimination

Compared with other societies, rural versus urban origin is a much larger source of overall income and other inequalities in China.⁴⁸ Because inequality rooted in hukou-based discrimination has been central since the Mao era, one final program launched by Xi Jinping that seemed as if it might have the potential to reduce inequality merits discussion: the major national urbanization plan launched in 2014. This plan was touted as a major step toward eventually phasing out the hukou system as a determinant of benefits and opportunities. (For more detailed discussion of this plan, see the chapter by Alexsia T. Chan in this volume.) Specifically, as at least a first step, a pledge was made to convert 100 million rural-urban migrants (out of the 270 million estimated in 2014) from rural/nonlocal to local urban hukou by 2020. Since 2014, official sources have even made the claim that China has now abolished the hukou system.⁴⁹

However, even this urbanization campaign does not indicate bold new leadership in combating inequality. Chinese authorities have recognized for decades that the hukou system, involving discrimination based on where you (or your parents) were born, is unjust, and critics have long demanded that it be phased out. Starting in 2001 or even earlier, China made it relatively easy for migrants to obtain urban hukou in small cities and towns, and efforts began to develop points systems (involving such things as possessing advanced education, investing in urban housing and businesses, and having stable employment while making social insurance payments for at least five years) that would enable rural migrants who accumulate enough points to qualify for urban hukou conversion even in larger cities.⁵⁰ So on balance there is not that much new here, except for the specific pledge of 100 million conversions by 2020. Late in 2020, that goal was declared achieved, although by that point China had even more rural-urban migrants (more than 290 million) than in 2014 (270 million), most of them still unable to earn enough points or to otherwise qualify for full urban citizenship.⁵¹

Furthermore, if one looks deeper at Xi Jinping’s 2014 urbanization plan, it becomes apparent that it has not produced much progress toward making it easier for migrants to enjoy equal urban citizenship and benefits, and in the largest cities ground has been lost. It may have become somewhat easier for migrants to obtain equal rights in small and medium-size cities (although one study indicates that as much as one-third of the recent rural to urban hukou conversions involved not migrants but rural communities reclassified as urban, without their residents’ lives changing in any way).⁵² Meanwhile, in Beijing and other very large cities drives were launched to reduce the overall population by making it harder for migrants to qualify for local urban registrations or send their children to public schools, in order to drive out the “low-end population” (diduan renkou).⁵³

Chinese social policy is still based on an underlying premise that Chinese citizens can be sorted into those of high quality (suzhi) versus low quality, and only those in the former category are qualified to enjoy full citizenship rights in large cities. As a consequence, the millions of migrants attracted by the opportunities available in China’s metropolises continue to experience severe discrimination.⁵⁴ If anything the “great wall” of hukou exclusion from large cities has strengthened.⁵⁵ If Xi Jinping wants to go down in history as a bold leader, he needs to find a way to eliminate institutionalized hukou-based discrimination.

Has China’s Trend toward Widening Income Gaps Now Been Reversed?

As noted at the outset, from early in the reform period into the new millennium, income inequality in China rose consistently and fairly sharply. Both the official National Bureau of Statistics (NBS) and the China Household Income Project (CHIP) surveys, as noted, indicated a rise in China’s national Gini from around 0.30 circa 1980 to the comparatively high level of 0.49 in 2007–9, during the middle of Hu Jintao’s leadership, and despite multiple efforts to reverse the trend.⁵⁶ What has happened to income inequality since?

More recent NBS and CHIP surveys report modest declines in income inequality nationally after the peak reached in 2007–9 (see table 4.2), with NBS’s Gini estimates declining from 0.49 then to 0.46 in 2015, while CHIP estimates declined even more, to 0.43 in 2013.⁵⁷ Researchers at Peking University conducting the China Family Panel Study (CFPS) produced an estimate of income inequality in 2010 that was higher than either NBS or CHIP, Gini = 0.52, but they also reported a modest decline after that, to 0.48 in 2012.⁵⁸ So although there are some disagreements about the overall level of income inequality in China in recent years, several studies agree that a slight decline in income inequality occurred after 2006–9.⁵⁹ One review of available survey evidence published in 2017 welcomed this modest trend enthusiastically, referring to it as “the great Chinese inequality turnaround.”⁶⁰

However, if we examine even more recent survey data, it appears that this improvement in income distribution has stalled or even been reversed (again, see table 4.2). The 2018 CHIP survey estimate of the national Gini index remained essentially unchanged from 2013 at 0.43; the NBS Gini estimate increased slightly from 0.46 in 2015 to 0.47 in 2016 and was still at 0.47 in 2020; and the CFPS Gini estimate increased from 0.48 in 2012 to 0.50 in 2014, and then up to 0.53 in both 2016 and 2018.⁶¹ Looking at the trend since 2007, and based on the parallel results from three separate survey-based estimates of household income inequality in China, it appears that there was a slight decline in income inequality after 2007–9, but only temporarily, with income inequality levels stabilizing or even increasing slightly after around 2013–15 and remaining at a high level compared with other countries. In other words, there has not been a “great inequality turnaround,” and there is no sign of reduced national income inequality in the years since Xi Jinping became China’s leader (at least up until 2018–20).⁶²

Since we lack good survey data on China’s income distribution after 2018, we can only speculate about whether the overall distribution of incomes has become more or less equal since then. However, there are several reasons for concern that the “leveling off of Gini at a high level” reported for 2013–18 may have been followed by a resumed increase in income inequality. First, the relative declines in formal employment in manufacturing and construction and the rapid growth of low-skilled informal employment in the service sector, and the resulting increased wage polarization reported by Scott Rozelle and his colleagues, is likely continuing, which would aggravate income inequality.

TABLE 4.2. Post-2007 trends in China household income inequality, Gini estimates

YEAR	NATIONAL BUREAU OF STATISTICS (NBS)	CHINA HOUSEHOLD INCOME PROJECT (CHIP)	CHINA FAMILY PANEL STUDY (CFPS)
2007	0.48	0.49
2008	0.49
2009	0.49
2010	0.48		0.52
2011	0.48
2012	0.47		0.48
2013	0.47	0.43
2014	0.47		0.50
2015	0.46
2016	0.47		0.53
2017	0.47
2018	0.47	0.43	0.53
2019	0.47
2020	0.47

Note: All Gini coefficients rounded off to two decimal places.
Sources: NBS: Statista, “Inequality of Income Distribution in China Based on the Gini Index,” December 8, 2022, https://www.statista.com/statistics/250400/inequality-of-income-distribution-in-china-based-on-the-gini-index; CHIP: Chuliang Luo, Terry Sicular, and Shi Li, “Overview: Incomes and Inequality in China, 2007–2013,” in Changing Trends in China’s Inequality: Evidence, Analysis, and Prospects, ed. Terry Sicular, Shi Li, Ximing Yue, and Hiroshi Sato (New York: Oxford University Press, 2020), 35–74; Chuliang Luo, Xu Zhang, and Shouwei Li, “Zhongguo jumin shouru chaju biandong fenxi (2013–2018)” (An analysis of changes in the extent of income disparity in China [2013–2018]), Social Sciences in China, no. 1 (2021): 33–54; CFPS: Yu Xie, Xiaobo Zhang, Qi Xu, and Chunni Zhang, “Short-Term Trends in China’s Income Inequality and Poverty: Evidence from a Longitudinal Household Survey,” China Economic Journal 8, no. 3 (2015): 235–51; Xiaohang Zhao, Yichun Yang, and Yu Xie, “Income Distribution,” in Zhongguo minsheng fazhan baogao, 2020–2021 (Well- being development report of China, 2020–2021), ed. Yu Xie et al. (Beijing: Peking University Press, forthcoming).

Second, over the past fifteen years or so, as noted, assets such as privately owned housing and stocks and other financial investments have gone from negligible to increasingly important sources of family incomes, with this trend likely to continue. The household income surveys used to construct the Gini estimates reported here are not good at including the very rich or measuring family wealth accurately. But tentative efforts to supplement household income surveys with other data on the wealth and incomes of Chinese ultrarich citizens yield conclusions that indicate that the battle to combat income inequality will be increasingly difficult. When the CHIP researchers employed such estimating methods, they concluded that instead of China’s national Gini declining from 0.49 in 2007 to 0.43 in 2013, that index actually increased to over 0.60 that year.⁶³

Third, our discussion up to this point has concerned the years before the outbreak of the COVID-19 pandemic in early 2020. It is quite clear that the massive disruptions caused by the pandemic in China fell disproportionately on the poor and disadvantaged, and particularly on migrant workers, millions of whom were thrown into unemployment and also faced disease contagion without adequate health and social service protection.⁶⁴ These trends indicate not only that there has been no clear progress in reducing income inequality in Xi Jinping’s first two terms, but that he and his colleagues will face strong headwinds in any efforts to combat inequality in his third term as CCP leader.

Toward the end of his second term in office, in August 2021, Xi Jinping launched a highly publicized new campaign to promote “common prosperity.” From the publicity and debates after that launch, some assume that Xi has finally decided to tackle China’s very high levels of income inequality in a more comprehensive and forceful manner. It is obviously premature to judge the results of the “Common Prosperity” campaign as Xi Jinping starts his third term. However, as of the end of 2022 that campaign remained notably vague and ad hoc. Although the objectives of the campaign, to reduce income inequality and promote more broad sharing of benefits and opportunities with China’s disadvantaged citizens, sound laudable (as well as fairly familiar, given the earlier pledges of CCP leaders Jiang Zemin and Hu Jintao), the actual measures adopted, such as cracking down on high-tech firms (and the private sector generally), pressuring ultrarich entrepreneurs to make large charitable donations, and eliminating the after-school academic tutoring industry, seem very unlikely to have much impact on China’s large income gaps.⁶⁵ As the campaign was launched, there was active discussion of spreading the long-stalled pilot experiments with property taxes on urban housing to a wider range of cities, in preparation for implementing a national property tax system. However, the serious financial troubles in China’s property firms and the weakening market for urban housing in 2022 seem to have put such plans for implementing property taxes on hold, perhaps permanently.⁶⁶ If one goes back and digs out the 2013 State Council thirty-five-point plan for combating inequality, what is striking is how much more concrete and specific that plan was compared to the vague promises of Xi Jinping’s “Common Prosperity” campaign.⁶⁷

As indicated in earlier sections of this chapter, the sort of measures that would be needed in order to reduce China’s large income gaps, particularly implementing and enforcing redistributive taxation systems (for example, income, property, capital gains, inheritance) and finally and fundamentally eliminating the subordinate-caste treatment of the majority of China’s population with rural hukou status (particularly moving dramatically to equalize the educational opportunities for rural-hukou youths), do not seem to be in the cards in discussions of “Common Prosperity” as of the end of 2022.⁶⁸ So although it is hard to predict China’s future, and it would be nice to be proved wrong, it seems likely that “Common Prosperity” will be yet another instance of Xi Jinping failing to provide bold leadership to combat inequality.

Chinese Popular Opinions about Inequality Trends and Extending the Social Safety Net

Given multiple efforts underway to combat income inequality, how do Chinese citizens view the issues involved? In this final section, results from the CIDJP surveys are used to summarize the attitudes and preferences of Chinese citizens.⁶⁹ First, how fair or unfair do respondents think it is to base access to benefits and opportunities on one’s hukou status, the central axis of discrimination that has dominated Chinese social life since the 1950s? Table 4.3 displays how respondents answered a range of questions about the fairness or unfairness of hukou-based discrimination.

In 2004, only a small minority of respondents thought it was fair to discriminate on the basis of hukou status, and, if anything, opposition has increased over time. In the last two rounds, for example, only 11–12 percent of respondents said it was fair to make it difficult for migrants to convert to urban hukou status, and 79–81 percent said country people and city people should have equal employment opportunities. Most respondents agreed that urbanites have received more benefit from China’s reforms than they deserve, and most disagreed with a statement that the advantages of city folks are explained by their greater contributions to China’s development. These results indicate that there was relatively little, and declining, popular support for China’s long-standing system of discrimination based on hukou status, at least in principle.⁷⁰

TABLE 4.3. Hukou discrimination attitudes across three national China surveys (weighted % responding strongly agree + agree)

	2004 (N = 3,267)	2009 (N = 2,967)	2014 (N = 2,507)
Fair for those with urban hukou to have more opportunities than rural hukou	25.3	20.6	18.0
Fair that rural migrants cannot easily obtain urban hukou	14.9	11.5	10.8
Fair that migrant children cannot attend urban public schools	7.5	n.a.	n.a.
Fair that migrants cannot be hired in certain occupations	9.1	n.a.	n.a.
Fair that migrants are not able to obtain urban welfare benefits	9.3	8.6	8.3
Urbanites have benefited more from reforms than is fair, rural residents less	47.9	54.1	48.8
Higher living standard of urbanites is due to greater contributions to development	22.1	22.5	20.4
Country people and city people should have equal employment rights	72.8	81.4	78.9

Note: n.a. = not asked (due to policy changes by the time of the 2009 survey, migrants were supposed to be able to send children to public schools and take any job, and therefore our PRC survey partners did not want to ask these questions again).

The CIDJP surveys also contain multiple questions about opportunities to get ahead, how fair or unfair current inequalities are, and whether the government should be pursuing specific steps to achieve greater equality. In a previous publication, I summarized Chinese attitudes on such questions across the CIDJP national surveys in 2004, 2009, and 2014 and how they compared with the views of citizens in a range of other countries.⁷¹ Briefly, despite the slowing of China’s economic growth recently, Chinese citizens remained much more optimistic than their counterparts in other countries about their chances of getting ahead and improving their family’s standard of living, and they were also distinctive in seeing the difference in whether people are rich versus poor as based mainly on merit factors (for example, hard work, talent, education), rather than on societal unfairness.⁷²

Given this emphasis on merit, Chinese citizens also tended to feel individuals should be able to keep what they have earned even if inequality increases, and they were not particularly in favor of income redistribution schemes or limits on individual incomes. However, they were not very likely to feel that large income differences are desirable or necessary to stimulate hard work and economic growth, and they increasingly felt that the government should be doing more to guarantee jobs and minimum incomes for the disadvantaged.⁷³ As noted at the outset of this chapter, there is nothing in these results that suggests (as of 2014 at least) that China faced a looming “social volcano” of anger about rising income inequality, but there was growing popular support for the kinds of expanded social safety net programs discussed earlier.

These heightened expectations are even more clearly demonstrated in responses to CIDJP questions about the government’s responsibility to provide public goods and benefits—in other words, to act more like a welfare state. In table 4.4a, the responses in all three surveys to questions about the relative responsibility of the government versus individuals and families are displayed.

TABLE 4.4A. Who should be responsible, the government or individuals and families?

Hukou category	Survey year	State fully	State mainly	About equally	Individual mainly	Individual fully	(Row %) total
Health care	2004	11.5	19.4	50.3	12.7	6.1	100.0
Health care	2009	10.6	42.9	42.3	3.9	0.3	100.0
Health care	2014	21.5	43.7	32.6	2.0	0.2	100.0
Primary/ secondary school	2004	17.3	26.5	33.6	15.2	7.4	100.0
Primary/ secondary school	2009	28.2	44.5	23.3	3.5	0.4	99.9
Primary/ secondary school	2014	30.5	45.6	20.6	3.1	0.2	100.0
Housing	2004	4.6	10.1	32.8	34.8	17.8	100.1
Housing	2009	3.6	15.7	46.4	27.1	7.2	100.0
Housing	2014	5.3	22.7	48.0	20.4	3.6	100.0
Eldercare	2004	13.1	20.3	38.0	17.5	11.1	100.0
Eldercare	2009	10.4	33.2	45.3	8.6	2.5	100.0
Eldercare	2014	15.5	37.6	40.9	5.0	1.0	100.0

Source: China Inequality and Distributive Justice Project surveys.

TABLE 4.4B. Who should be responsible for medical care?
(By survey and hukou category)

Hukou category	Survey year	State fully	State mainly	About equally	Individual mainly	Individual fully	(Row %) total
Rural residents	2004	8.0	14.2	53.2	15.5	9.0	99.9
Rural residents	2009	9.9	37.8	46.8	5.0	0.6	100.1
Rural residents	2014	22.2	43.3	32.1	2.1	0.3	100.0
Urban migrants	2004	8.7	20.9	49.0	13.8	7.7	100.1
Urban migrants	2009	11.3	48.0	36.3	3.9	0.5	100.0
Urban migrants	2014	16.6	50.6	27.2	4.7	0.9	100.0
Urban citizens	2004	14.3	32.4	42.6	8.9	1.9	100.1
Urban citizens	2009	12.3	46.7	38.5	2.5	0.0	100.0
Urban citizens	2014	17.9	46.3	33.8	1.8	0.2	100.0

Source: China Inequality and Distributive Justice Project surveys.

TABLE 4.4C. Who should be responsible for eldercare? (By survey and hukou category)

Hukou category	Survey year	State fully	State mainly	About equally	Individual mainly	Individual fully	(Row %) total
Rural residents	2004	10.3	12.6	44.2	18.6	14.3	100.0
Rural residents	2009	10.2	32.6	43.0	10.2	4.0	100.0
Rural residents	2014	17.3	38.5	37.4	5.6	1.2	100.0
Urban migrants	2004	7.7	27.0	37.2	15.8	12.2	99.9
Urban migrants	2009	10.8	40.2	40.7	6.9	1.5	100.1
Urban migrants	2014	17.0	32.3	40.9	8.1	1.7	100.0
Urban citizens	2004	19.8	32.9	32.9	9.6	4.8	100.0
Urban citizens	2009	11.2	38.3	43.3	6.5	0.7	100.0
Urban citizens	2014	13.4	38.8	43.8	3.6	0.4	100.0

Source: China Inequality and Distributive Justice Project surveys.

In table 4.4a, we see a very clear pattern. For each of the public goods inquired about—health care, primary and secondary schooling, housing, and care for the elderly—from the first to the third survey large increases were registered in the sentiment that provision of these goods and services should be mainly or fully the government’s responsibility, rather than the responsibility of individuals and families. The proportion seeing health care as mainly or fully the government’s responsibility more than doubled, from 30.9 percent to 65.2 percent, and similarly there was a more than 30 percent increase regarding the government’s duty to provide primary and secondary schooling (from 43.8 percent to 76.1 percent). The proportion of respondents who saw housing as mainly or fully the government’s responsibility almost doubled, from 14.7 percent to 28 percent, and in the realm that in China’s Confucian culture has been seen as quintessentially the family’s responsibility, eldercare, respondents went from only about one-third in 2004 seeing this as primarily a government responsibility (33.4 percent) to in 2014 a majority viewing it that way (53.1 percent). These are dramatic shifts toward the view that the government should have the primary responsibility to meet the basic welfare needs of its citizens. Since this shift was clearly already underway between the first and second surveys, perhaps the role of Hu Jintao in trying to turn China into a “harmonious society” encouraged this attitude change.⁷⁴

The shift toward higher expectations regarding government responsibility for popular welfare involves particularly large changes for those who were deprived until recently. The contrasting patterns are visible in tables 4.4b and 4.4c. For simplicity, the focus is on only two of the four public goods covered in table 4.4a, health care and eldercare, and on the views of rural residents, rural-to-urban migrants, and urban hukou respondents. In 2004, urbanites, presumably still influenced by their decades of being “supplicants to a socialist state,” were much more likely than villagers or migrants to say that the government should be primarily responsible for health care and eldercare.⁷⁵ By 2014, urban attitudes regarding eldercare had not changed much, but urbanites had increased their support for government responsibility for health care. However, the shifts over time in the attitudes of rural respondents and migrants were much larger, so that by 2014 all three population groups expressed very similar attitudes on these questions (with villagers actually slightly more likely than urbanites to say that the government has the primary responsibility). These data indicate that a major shift has occurred in Chinese popular attitudes toward emphasizing the government’s primary responsibility to provide public goods and welfare services, and by 2014 higher expectations in this regard were very widely shared.

To sum up, Chinese citizens even in 2014 remained quite optimistic about the ability of ordinary Chinese to get ahead, and they were not all that angry about the higher income and other gaps that characterized China early in the Xi Jinping era. However, these results should not lead to complacency among China’s leaders, because, at the same time, citizens wanted and expected the government to do more to help the poor and disadvantaged and to provide more robust social welfare programs benefiting everyone. Both Xi Jinping and his predecessors have encouraged rising popular expectations on the popular welfare front.

Unfortunately, no comparable national survey data on inequality attitudes are available after 2014, which is of course early in Xi Jinping’s first term as CCP leader. A number of more recent developments, including the further slowing of the Chinese growth engine, the onset of the COVID-19 pandemic in 2020 (and particularly the zero-COVID policy that was harshly enforced subsequently), the high levels of youth unemployment at the end of Xi’s second term, increasingly repressive restrictions on freedom of speech and association, and the crises affecting the property market and housing values all suggest to many analysts that popular acceptance of the status quo, optimism about getting ahead, and satisfaction with Xi Jinping as China’s leader may have declined since 2020, perhaps sharply.⁷⁶ However, without the ability to collect new and reliable survey data on Chinese popular attitudes, we cannot judge whether these speculations are accurate or not.⁷⁷

Conclusion

One of the challenges China has faced, both before and since Xi Jinping became the CCP leader, is how to combat rising income inequality. I have reviewed here a wide range of policies and initiatives underway in China to examine whether they are succeeding in reining in income inequality and, if so, whether Xi Jinping should be given credit for any progress. On both counts, I end up more negative than positive. Although there is some evidence that income inequality among ordinary Chinese households declined slightly just prior to Xi Jinping becoming leader, that trend has not continued on his watch, and income inequality either leveled off or is increasing once again. In any case, China’s inequality levels remain very high in comparative terms. If we take into account the growing importance of wealth inequality, the incomes of China’s ultrarich, and the relative weakness to date of progressive taxation, then income inequality may well increase in the years ahead, rather than decline. Xi Jinping’s recently launched “Common Prosperity” campaign seems unlikely to provide an effective route to a more equal society.

China has made substantial progress in developing programs characteristic of a modern welfare state, and particularly in beginning to spread social safety nets to its previously disadvantaged rural-origin citizens. But in reviewing these programs, and even in regard to his pledge to eliminate poverty by 2020, Xi Jinping has been building upon and extending progress already underway. Xi deserves some credit for increases in the funding of these programs as well as for reducing the administrative barriers separating the programs for rural residents (and migrants) from some urbanites. But this is still very much a work in progress, and several issues remain in doubt: whether the inequalities that derive from building these safety nets on China’s very unequal administrative system can be overcome, whether the distribution of benefits from these programs is contributing much to the effort to combat rising income inequality, and whether China will be able to afford a more fully developed welfare state. And on some fronts, particularly regarding educational opportunities for rural-origin youths in large cities, China has moved backward since Xi took charge, rather than forward. Measures that could promote greater progress, such as instituting and enforcing systematic and progressive income, capital gains, inheritance, and property taxes, as well as finally abolishing hukou-based discrimination in determining access to opportunities and public goods, were not implemented during Xi Jinping’s first two terms. However bold Xi Jinping’s leadership has been in foreign affairs and in some other domestic political realms, his efforts to rein in rising income gaps have been modest and incremental rather than bold. China today remains a highly unequal society, and it will take much more bold leadership than Xi Jinping has demonstrated thus far to make China a more equal, and more equitable, society.

Notes

I received advice and assistance in preparing drafts from Kam Wing Chan, Eli Friedman, Qin Gao, Sarah Rogers, Scott Rozelle, Terry Sicular, Dorothy J. Solinger, Andrew Walder, and Yu Xie, who bear no responsibility for the use I have made of their ideas and materials.

1. As measured by the Gini statistic, in which 0 means total equality and 1 means total inequality, China went from having a modest Gini in 1980 of around 0.30 to a comparatively high level of 0.49 in 2007. See Shi Li, Hiroshi Sato, and Terry Sicular, eds., Rising Inequality in China: Challenges to a Harmonious Society (New York: Cambridge University Press, 2010). The trend since 2007 is discussed in a later section.
2. John Knight, Shi Li, and Haiyuan Wan, “The Increasing Inequality of Wealth in China,” in Changing Trends in China’s Inequality: Evidence, Analysis, and Prospects, ed. Terry Sicular, Shi Li, Ximing Yue, and Hiroshi Sato (New York: Oxford University Press, 2020), 109–44.
3. Damian Grammaticas, “China’s Ever-Widening Wealth Gap,” BBC News, November 1, 2012, https://www.bbc.com/news/world-asia-china-20165283.
4. Although the terms are often used interchangeably (as in the Grammaticas quotation), they are quite different. Inequality refers to the objective shape of the distribution of resources and opportunities, whereas inequity refers to a subjective assessment that a pattern of distribution differs from what is fair.
5. Martin King Whyte, Myth of the Social Volcano: Perceptions of Inequality and Distributive Injustice in Contemporary China (Stanford, CA: Stanford University Press, 2010); Martin King Whyte, “China’s Dormant and Active Social Volcanoes,” China Journal, no. 75 (2016): 9–37. Popular reactions to current levels of inequalities, as revealed by the China Inequality and Distributive Justice Project (CIDJP) national surveys in 2004, 2009, and 2014, will be discussed in a later section.
6. Xinhua, “Survey of Chinese Officials’ Opinions on Reform: Beijing Daily,” Xinhua News Bulletin, November 29, 2004.
7. David S. G. Goodman, “The Campaign to ‘Open Up the West’: National, Provincial-Level, and Local Perspectives,” China Quarterly, no. 178 (2004): 317–34. The “harmonious society” programs included abolishing the grain tax, eliminating tuition charges for elementary and lower middle schools, and creating village cooperative medical insurance plans. For a fuller discussion, see Li, Sato, and Sicular, Rising Inequality in China, chap. 1.
8. Nargiza Salidjanova, “China’s New Income Inequality Reform Plan and Implications for Rebalancing” (US-China Economic and Security Review Commission, Washington, DC, March 2013).
9. See Yawen Chen and Ryan Woo, “China’s Property Tax Will Be Implemented according to the City-Lawmaker,” Reuters, March 14, 2019. (Thanks to Terry Sicular for alerting me to this press report.) The need to implement systematic property taxes was one of the elements of the thirty-five-point Income Distribution Plan of 2013, so the fact that little progress had been made in the six years after, and even by the end of Xi’s second term as CCP leader, is notable.
10. According to the analyses in Knight, Li, and Wan, “The Increasing Inequality of Wealth in China,” net wealth per capita in China increased much faster between 2002 and 2013, by 16.7 percent annually, than household incomes (which generally had been increasing by between 7 and 8 percent annually); among types of wealth, housing was the most rapidly increasing over this span (by 20.1 percent per annum); and housing wealth increased from 53 percent to 73 percent of family wealth. Wealth attributable to housing also became more unequally distributed between 2002 and 2013, with the Gini of net housing assets increasing from 0.64 in 2002 to 0.70 in 2013 (while inequality in the other relatively important source of family wealth, financial assets, actually declined modestly, from Gini = 0.69 in 2002 to 0.65 in 2013). The near total exclusion of China’s millions of rural-urban migrants from the wealth creation bonanza of urban real estate is a major source of this growing wealth inequality. The lack of property taxes on housing also contributes to China’s high rate of vacant urban housing units, 21.4 percent in 2017 according to a recent report, much higher than the vacancy rates in eight comparison countries. See Li Gan, Qing He, Ruichao Si, and Daichun Yi, “Relocating or Redefined: A New Perspective on Urbanization in China,” NBER Working Paper No. 26585 (National Bureau of Economic Research, Cambridge, MA, December 2019), table 1, http://www.nber.org/papers/w26585. On the weakness of income redistribution in China, compared with advanced capitalist countries and Russia, see Andrew Walder, “China’s Extreme Inequality: The Structural Legacies of State Socialism,” China Journal, no. 90 (2023): 1–26.
11. See, for example, Cissy Zhou, Frank Tang, and Zhou Xin, “Xi Jinping Tells Chinese Officials They Must ‘Finish the Journey’ and Shifts Focus Back to Fight against Poverty as Economy Stabilizes,” South China Morning Post, April 22, 2019; Javier Hernandez, “Xi Jinping Vows No Poverty in China by 2020. That Could Be Hard,” New York Times, October 31, 2017.
12. See the discussion in Lucy Hornby, “Beijing’s Relentless March to Eliminate Poverty,” Financial Times, May 29, 2019; Sarah Rogers, “The End of Poverty in China?,” Research Brief No. 4 (University of Melbourne Centre for Contemporary Chinese Studies, Melbourne, August, 2016); Sarah Rogers, Jie Li, Hua Guo, and Cong Li, “Moving Millions to Eliminate Poverty: China’s Rapidly Evolving Practice of Poverty Resettlement,” Development Policy Review 38, no. 5 (2019): 541–54; Youqin Huang, “Farewell to Villages: Forced Urbanization in Rural China,” in China’s Urbanization and Socioeconomic Impact, ed. Zongli Tang (Singapore: Springer, 2017), 207–27.
13. See Tom Hancock, “Xi Declares End to Extreme Poverty in China, Meeting Party Goal,” Bloomberg News, December 4, 2020, https://www.bloomberg.com/news/articles/2020-12-04/xi-declares-end-to-extreme-poverty-in-china-meeting-party-goal; and, for example, David Bandurski, “Propaganda Soars into Orbit,” China Media Project, January 29, 2021, https://chinamediaproject.org/2021/01/29/propaganda-soars-into-orbit.
14. Chuliang Luo, Shi Li, and Terry Sicular, “The Long-Term Evolution of Income Inequality and Poverty in China,” WIDER Working Paper No. 2018/153 (United Nations University World Institute for Development Economics Research [UNU-WIDER], Helsinki, December 2018), https://doi.org/10.35188/UNU-WIDER/2018/595-4.
15. However, one recent report based on four independent national surveys claims that the poverty rates in official figures are substantially underestimated in all periods. See Chunni Zhang, Qi Xu, Xiang Zhou, Xiaobo Zhang, and Yu Xie, “Are Poverty Rates Underestimated in China? New Evidence from Four Recent Surveys,” China Economic Review 31 (2014): 410–25.
16. See Terry Sicular, “Will China Eliminate Poverty in 2020?,” China Leadership Monitor, no. 66 (2020), https://www.prcleader.org/post/will-china-eliminate-poverty-in-2020.
17. Li, Sato, and Sicular, Rising Inequality in China.
18. However, Xi’s campaign was based on the erroneous assumption that there is a stable category of the persistently poor. In reality in China and elsewhere, over time many families rise above, and descend into, severe poverty as their efforts and family circumstances change. For evidence on this flux in China, see Yu Xie, Xiaobo Zhang, Qi Xu, and Chunni Zhang, “Short-Term Trends in China’s Income Inequality and Poverty: Evidence from a Longitudinal Household Survey,” China Economic Journal 8, no. 3 (2015): 235–51.
19. As noted, the 2020 coronavirus pandemic shook China, with the economy registering negative growth of almost 7 percent in the first quarter of the year before recovering, with recovery likely to be prolonged and difficult, and with the number of COVID-19 cases in China rising sharply as Xi began his third term as CCP leader.
20. Nara Dillon, Radical Inequalities: China’s Revolutionary Welfare State in Comparative Perspective (Cambridge, MA: Harvard University Asia Center, 2015).
21. See Andrew Walder, “The Remaking of the Chinese Working Class, 1949–1981,” Modern China 10, no. 1 (1984): 3–48; Wang Feng, Boundaries and Categories: Rising Inequality in Post-Socialist China (Stanford, CA: Stanford University Press, 2008); Yanjie Bian, Work and Inequality in Urban China (Albany: State University of New York Press, 1994).
22. Whyte, Myth of the Social Volcano; Martin King Whyte, “China’s Hukou System: How an Engine of Development Has Become a Major Obstacle,” China- US Focus, April 24, 2019, https://www.chinausfocus.com/society-culture/chinas-hukou-system-how-an-engine-of-development-has-become-a-major-obstacle.
23. Although the focus here is on the leadership of Xi Jinping, China’s premier, Li Keqiang, took major responsibility for the extension of social welfare benefits after 2014, even though Xi tended to monopolize the credit.
24. Lixiong Yang, “The Social Assistance Reform in China: Toward a Fair and Inclusive Social Safety Net” (paper presented at the United Nations conference “Addressing Inequalities and Challenges to Social Inclusion through Fiscal, Wage, and Social Protection Policies,” New York, NY, June 25–27, 2018); Qin Gao, Welfare, Work, and Poverty: Social Assistance in China (New York: Oxford University Press, 2017). Yang notes that China’s more than two hundred million urban migrants are ineligible for dibao support from local city governments no matter how poor they are (nor are they eligible for rural dibao support).
25. See Dorothy J. Solinger, “Banish the Impoverished Past: The Predicament of the Abandoned Urban Poor,” in Polarized Cities: Portraits of Rich and Poor in Urban China, ed. Dorothy J. Solinger (Lanham, MD: Rowman and Littlefield, 2019), 59–84; Yang, “The Social Assistance Reform in China.”
26. See the discussion in Dorothy J. Solinger, “Manipulating China’s ‘Minimum Livelihood Guarantee’: Political Shifts in a Program for the Poor in the Period of Xi Jinping,” China Perspectives, no. 2 (2017): 47–57. The 2014 CIDJP survey revealed that many Chinese were critical of how fairly the dibao system was operating. When asked how easy it would be for them to apply for and receive dibao payments if they qualified, 50.4 percent of those surveyed responded that it would be difficult or impossible. Furthermore, when presented with a statement that some people who qualify for dibao payments are not receiving them, 67.1 percent of respondents agreed, and when presented with the statement that some people are receiving dibao payments who don’t deserve them, 66.7 percent agreed.
27. According to official statistics, from 2013 to 2018 the proportion of individuals receiving dibao payments declined from 5.47 percent to 3.24 percent. Qin Gao, personal communication with author.
28. Sonali Jain-Chandra, Niny Khor, Rui Mano, Johanna Schauer, Philippe Wingender, and Juzhong Zhuang, “Inequality in China—Trends, Drivers, and Policy Remedies,” IMF Working Paper No. 2018/127 (International Monetary Fund, Washington, DC, June 2018).
29. Sean Sylvia, Yaojiang Shi, Hao Xue, Xin Tian, Huan Wang, Qingmei Liu, Alexis Medina, and Scott Rozelle, “Survey Using Incognito Standardized Patients Shows Poor Quality Care in China’s Rural Clinics,” Health Policy and Planning 30, no. 3 (2015): 322–33.
30. However, recent research indicates that this administrative merger (and the comparable pension merger to be discussed shortly) was still a work in progress as of 2017, with migrants sometimes finding that urban hospitals refuse to accept their rural medical insurance verification as well as often providing less reimbursement for medical care than could be obtained from a hospital in their rural place of origin, serving as an inducement for migrants to return to the village they came from to seek medical care. See Alexsia T. Chan and Kevin J. O’Brien, “Phantom Services: Deflecting Migrant Workers in China,” China Journal, no. 81 (2019): 103–22.
31. See Andrea Vilela, “Pension Coverage in China and the Expansion of the New Rural Social Pension,” Pension Watch Briefing No. 11 (HelpAge International, London, 2013); Robert C. Pozen, “Tackling the Chinese Pension System” (Paulson Institute, University of Chicago, July 2013), https://www.brookings.edu/articles/reforming-the-chinese-pension-system.
32. These are weighted totals. In 2004, 52.4 percent of urban respondents were covered by pensions, but only 8.1 percent of rural respondents and 6.2 percent of urban migrants. By 2014, the coverage of all three categories had increased, to 65.2, 48.7, and 32.4 percent, respectively. As with health insurance, migrants mostly began to receive coverage by enrolling in the pension plans of their rural places of origin, not of their urban employers. It should also be noted that important regional differences exist between coastal locales, which mostly provide pensions only to formal employees and not to informal workers and migrants, and inland locales, where pension plans are more inclusive but less generous. See Yujeong Yang, “The Politics of Inclusion and Exclusion: Chinese Dual-Pension Regimes in the Era of Labor Migration and Labor Informalization,” Politics and Society 49, no. 2 (2021): 147–80.
33. Shi Li, Terry Sicular, and Finn Tarp, “Inequality in China: Development, Transition, and Policy,” WIDER Working Paper No. 2018/174 (United Nations University World Institute for Development Economics Research [UNU-WIDER], Helsinki, December 2018), 6, https://doi.org/10.35188/UNU-WIDER/2018/616-6. Another report states that according to Chinese official figures, in 2017 the average payout from the basic urban employee pension fund was ¥34,498 for the year, while the average payout from the merged rural-urban resident pension fund was ¥1,520, a ratio of more than 22:1. See China Labour Bulletin, “China’s Social Security System,” China Labour Bulletin, March 2019; also see “The Migrant Workers Who Made China an Industrial Giant Face a Bleak Retirement,” Economist, November 30, 2019.
34. Figures as reported in Nirmal Kumar Chandra, “Education in China: From the Cultural Revolution to Four Modernisations,” Economic and Political Weekly 22, no. 19–21 (May 1987): 121–36.
35. Qianhan Lin and Wei-Jun Yeung, “Beyond the Middle-School Gates: The Urban-Rural Divergence of School-Work Paths of China’s Youth,” in Social Inequality in China, ed. Yaojun Li and Yanjie Bian (London: World Scientific Publishing, 2023), 185–208.
36. Yi Wan and Edward Vickers, “Toward Meritocratic Apartheid? Points Systems and Migrant Access to China’s Urban Public Schools,” China Quarterly, no. 249 (2022): 210–38. Eli Friedman describes these discriminatory policies as creating an “inverted welfare state,” reinforcing the advantages of the already advantaged. See Eli Friedman, The Urbanization of People: Development, Labor Markets, and Schooling in a Chinese City (New York: Columbia University Press, 2022).
37. See Minhua Ling, The Inconvenient Generation: Migrant Youth Coming of Age on Shanghai’s Edge (Stanford, CA: Stanford University Press, 2019); Pei-chia Lan, “Segmented Incorporation: The Second Generation of Rural Migrants in Shanghai,” China Quarterly, no. 217 (2014): 243–65. In many places, rural youths attending lower middle schools and even primary schools also have to board, and with the emptying out of villages and relocation of families, increasing numbers of village primary schools have closed, raising the proportion of boarding students even at entry level. One report claims that between 2000 and 2015 nearly three-quarters of all rural primary schools, more than three hundred thousand, were closed down. See “China’s Grim Rural Boarding Schools,” Economist, April 12, 2017.
38. Eli Friedman, “Just-in-Time Urbanization? Managing Migration, Citizenship, and Schooling in the Chinese City,” Critical Sociology 44, no. 3 (2018): 503–18; Friedman, The Urbanization of People; Yiming Dong and Charlotte Goodburn, “Residence Permits and Points Systems: New Forms of Educational and Social Stratification in Urban China,” Journal of Contemporary China 29, no. 125 (2020): 647–66.
39. Maocan Guo and Xiaogang Wu, “School Expansion and Educational Stratification in China, 1981–2006” (paper presented at the Annual Meeting of the American Sociological Association, Boston, June 2008); Tony Tam and Jin Jiang, “Divergent Urban-Rural Trends in College Attendance: State Policy Bias and Structural Exclusion in China,” Sociology of Education 88, no. 2 (2015): 160–80.
40. Scott Rozelle and Natalie Hell, Invisible China: How the Urban-Rural Divide Threatens China’s Rise (Chicago: University of Chicago Press, 2020), table 1.
41. Lei Wang, Mengjie Li, Cody Abbey, and Scott Rozelle, “Human Capital and the Middle Income Trap: How Many of China’s Youth Are Going to High School?,” Developing Economies 56, no. 2 (2018): 82–103.
42. Wang et al., “Human Capital and the Middle Income Trap.”
43. Anita Koo, “Expansion of Vocational Education in Neoliberal China: Hope and Despair among Rural Youth,” Journal of Education Policy 31, no. 1 (2016): 46–59; Guirong Li, Jiajia Xu, Liying Li, Zhaolei Shi, Hongmei Yi, James Chu, Elena Kardanova, Yanyan Li, Prashant Loyalka, and Scott Rozelle, “The Impacts of Highly Resourced Vocational Schools on Student Outcomes in China,” China and World Economics 28, no. 6 (2020): 125–50; Ling, The Inconvenient Generation; Prashant Loyalka, Xiaoting Huang, Linxin Zhang, Jianguo Wei, Hongmei Yi, Yingqua Song, Yaojiang Shi, and James Chu, “The Impact of Vocational Schooling on Human Capital in Developing Countries: Evidence from China,” World Bank Economic Review 30, no. 1 (2015): 143–70. On the quality problems of urban vocational schools, see T. E. Woronov, Class Work: Vocational Schools and China’s Urban Youth (Stanford, CA: Stanford University Press, 2015).
44. Although China reported that about 60 percent of the total population lived in urban areas in 2019, this includes urban migrants, so perhaps only 40 percent of Chinese had urban hukou that year. Given higher birth rates in rural China, it is estimated that more than 70 percent of all Chinese youths have rural hukou. See Rozelle and Hell, Invisible China, 9. In other words, the large majority of Chinese youths are still being discriminated against in terms of educational opportunities.
45. For what it is worth, in the four years prior to 2012, the proportion of rural youths with some high schooling increased from 51 percent to 66 percent, and in the subsequent four years the proportion increased further to 77 percent, according to Wang et al., “Human Capital and the Middle Income Trap.” On increased inequalities in access to advanced education in large cities, see Dong and Goodburn, “Residence Permits and Points Systems.”
46. A recent analysis projects that if current (very unequal) benefit levels are maintained, by 2050 China will have to spend 23 percent of its GDP (compared to 11.6 percent in 2016) on education, health care, and pensions, due largely to rapid population aging. If benefit levels are equalized and raised to the levels enjoyed by citizens in rich countries today, which China says it aims to achieve, public spending in these realms could rise to 32 percent of GDP, a figure even more unsustainable. See Yong Cai, Wang Feng, and Ke Shen, “Fiscal Implications of Population Aging and Social Sector Expenditure in China,” Population and Development Review 44, no. 4 (2018): 811–31.
47. See Scott Rozelle, Yiran Xia, Dimitris Friesen, Bronson Vanderjack, and Nourya Cohen, “Moving beyond Lewis: Employment and Wage Trends in China’s High- and Low-Skilled Industries and the Emergence of an Era of Polarization,” Comparative Economic Studies 62 (2020): 555–89; Scott Rozelle and Matthew Boswell, “Complicating China’s Rise: Rural Underemployment,” Washington Quarterly 44, no. 2 (2021): 61–74.
48. Martin King Whyte, ed., One Country, Two Societies: Rural-Urban Inequality in Contemporary China (Cambridge, MA: Harvard University Press, 2010); Wang, Boundaries and Categories; Yu Xie and Xiang Zhou, “Income Inequality in Today’s China,” Proceedings of the National Academy of Sciences 111, no. 19 (2014): 6928–33.
49. See CGTN, “100 Million Have Settled in Urban Areas as Part of China’s Hukou System Reform,” CGTN News, October 8, 2020, https://news.cgtn.com/news/2020-10-08/100-million-affected-as-part-of-China-s-hukou-system-reform-UpT5zFzzHO/index.html. CGTN states, “The dual ‘hukou’ system, which has lasted for over half a century and divided the people into rural and non-rural population was abolished [after 2014].” However, the new urbanization plan simply stated that people should be categorized no longer as having either agricultural or nonagricultural hukou, but instead as having local urban hukou or outsider hukou. The great majority of migrants to China’s cities, the “floating population” of voluntary labor migrants who have powered China’s economic boom, are accordingly now to be termed holders of outsider hukou, with no change or reduction in the systematic discrimination they experience. The claim that the hukou system has been eliminated is patently absurd.
50. See the discussion of these earlier efforts in Fei-Ling Wang, “Renovating the Great Floodgate: The Reform of China’s Hukou System,” in One Country, Two Societies: Rural-Urban Inequality in Contemporary China, ed. Martin King Whyte (Cambridge, MA: Harvard University Press, 2010), 335–64. (Note: the city points systems used to judge qualification for conversion from outsider/rural to local urban hukou are not the same as the points systems discussed earlier to judge eligibility of migrant children for enrolling in urban public schools, which may vary from district to district within a city. See the discussion in Friedman, The Urbanization of People; Dong and Goodburn, “Residence Permits and Points Systems.”)
51. CGTN, “100 Million Have Settled in Urban Areas.” Obviously, rural migrants have continued to flow into Chinese cities since 2014, more than offsetting the rate of hukou conversions. The totals of 270 million and 290 million rural-urban migrants are based on press reports at the time, and it is not certain how they were calculated and if they are fully comparable. It is clear, at least, that the proportion of the total urban population that lacks local hukou increased between 2014 and 2020. See Kam Wing Chan, “What the 2020 Chinese Census Tells Us about Progress in Hukou Reform,” China Brief 21, no. 15 (2021): 11–17.
52. See Gan et al., “Relocating or Redefined.”
53. See Dexter Roberts, The Myth of Chinese Capitalism: The Worker, the Factory, and the Future of the World (New York: St. Martin’s Press, 2020), 32–33; Friedman, “Just-in-Time Urbanization?”; Friedman, The Urbanization of People.
54. One recent study found that in Shanghai, where about 40 percent of the residents are migrants, even those who had obtained Shanghai local hukou had a 68 percent lower chance of homeownership (controlling for education, age, gender, and other background traits) than lifelong Shanghai urban citizens, while migrants who had not converted to local Shanghai hukou status had a 90 percent lower likelihood of homeownership if they came from another city, and 92 percent lower if they came from a rural area. See Zhenchao Qian, Yuan Cheng, and Yue Qian, “Hukou, Marriage, and Access to Wealth in Shanghai,” Journal of Ethnic and Migration Studies 46, no. 18 (2019): 3920–36.
55. Ren-Jie Hong,Yu-Chi Tseng, and Thong-Hong Lin, “Guarding the New Great Wall: The Politics of Household Registration Reforms and Public Provision in China,” China Quarterly, no. 251 (2022): 776–97.
56. Li, Sato, and Sicular, Rising Inequality in China.
57. Chuliang Luo, Terry Sicular, and Shi Li, “Overview: Incomes and Inequality in China, 2007–2013,” in Changing Trends in China’s Inequality: Evidence, Analysis, and Prospects, ed. Terry Sicular, Shi Li, Ximing Yue, and Hiroshi Sato (New York: Oxford University Press, 2020), 35–74.
58. Xie and Zhou, “Income Inequality in Today’s China”; Xie et al., “Short-Term Trends in China’s Income Inequality and Poverty.” Using a different approach that compares the top 10 percent of household incomes with the bottom 50 percent, some other scholars claim that income inequality in China has been consistently higher than official estimates indicate, but they also show some reversal and slight decline in income inequality after about 2006. See Thomas Piketty, Li Yang, and Gabriel Zucman, “Capital Accumulation, Private Property, and Rising Inequality in China, 1978–2015,” American Economic Review 109, no. 7 (2019): 2469–96.
59. Regarding disagreements, surveys of the wealth of Chinese households conducted by the Southwestern University of Finance and Economics, termed the China Household Finance Surveys (CHFS), produced a much higher income inequality estimate of Gini = 0.61 in 2010, but other researchers have criticized this outlier estimate as due to biases in the sampling design used in the CHFS. For details, see Southwestern University of Finance and Economics, Zhongguo jiating shouru bu pingdeng baogao (Report on China’s household income inequality) (Chengdu: Southwestern University of Finance and Economics, 2012); Terry Sicular, Shi Li, Ximing Yue, and Hiroshi Sato, eds., Changing Trends in China’s Inequality: Evidence, Analysis, and Prospects (New York: Oxford University Press, 2020), chap. 1.
60. Ravi Kanbur, Yue Wang, and Xiaobo Zhang, “The Great Chinese Inequality Turnaround,” IZA Discussion Paper No. 10635433 (Institute of Labor Economics [IZA], Bonn, 2017).
61. The NBS has released annual Gini estimates up until 2020, although the quality of the 2020 survey in the midst of the pandemic may be questioned. The CHIP surveys were carried out in 2007, 2013, and 2018, and the CFPS surveys have been carried out every two years since 2010, with the most recent survey from which Gini can be estimated being 2018.
62. The slight improvement in overall income inequality that directly preceded Xi’s becoming CCP head is most likely due to growing shortages of labor from the countryside finally producing increases in the wages of migrant laborers, leading to some reduction in the urban-rural income gap. The CHIP survey estimate of the ratio of urban to rural household incomes in 2007 was an extraordinarily high 4.01, but in the 2013 survey this had been reduced to 2.56. See Luo, Sicular, and Shi, “Overview: Incomes and Inequality,” table 1. However, as noted, recent research suggests that this improvement was brief, with the shift away from formal to informal employment after about 2010 leading to increasing wage polarization and poorly educated migrant laborers losing ground. See Rozelle et al., “Moving beyond Lewis”; Rozelle and Boswell, “Complicating China’s Rise.”
63. See Luo, Sicular, and Shi, “Overview: Incomes and Inequality.”
64. See Lei Che, Haifeng Du, and Kam Wing Chan, “Unequal Pain: A Sketch of the Impact of the Covid-19 Pandemic on Migrants’ Employment in China,” Eurasian Geography and Economics 61, no. 4–5 (2020): 448–63; Meihua Luo, “China’s Lockdowns Are Fueling Record Growth—in Inequality,” Sixth Tone, July 13, 2022, https://www.sixthtone.com/news/1010753. Huan Wang, Sarah-Eve Dill, Huan Zhou, Yue Ma, Hao Xue, Prashant Loyalka, Sean Sylvia, Matthew Boswell, Jason Lin, and Scott Rozelle, “Off the COVID-19 Epicentre: The Impact of Quarantine Controls on Employment, Education and Health in China’s Rural Communities,” China Quarterly, no. 249 (2022): 183–209.
65. On the campaign’s objectives, see Xi Jinping, “Making Solid Progress toward Common Prosperity,” Qiushi Journal, English ed., updated January 18, 2022 (excerpt from speech on August 17, 2021), http://en.qstheory.cn/2022-01/18/c_699346.htm.
66. “Conditions Not Right for China to Expand Property Tax Trial This Year—Xinhua,” Reuters, March 16, 2022.
67. Salidjanova, “China’s New Income Inequality Reform Plan.”
68. Liu Shangxi, president of the Chinese Academy of Fiscal Sciences, published a recent article in which he argued that inequality in incomes is based on inequality in capabilities, and the best way to combat income inequality would be to remove the obstacles preventing the majority of Chinese (those with rural hukou) from fully developing their capabilities, particularly by equalizing rural and urban educational opportunities, which is far from happening currently. See Liu Shangxi, “Zouxiang gongtong fuyu yao tupo lilun yu shixian de shuangzhong tiaozhan” (To achieve common prosperity, we must break through dual theoretical and practical challenges), Aisixiang, October 20, 2022, https://www.aisixiamg.com/data/137271.html. (Thanks to David Kelly for providing his translation of this article.)
69. The CIDJP carried out surveys with nationally representative samples of Chinese adults between the ages of eighteen and seventy in 2004, 2009, and 2014. The surveys were based on spatial probability sampling methods and yielded sample sizes of 3,267, 2,967, and 2,507. The project involved an international team of collaborators, with the survey fieldwork carried out by the Research Center for Contemporary China at Peking University. For further information, see Whyte, Myth of the Social Volcano; Whyte, “China’s Dormant and Active Social Volcanoes.”
70. Further analysis of these responses reveals that even urban respondents are not in favor of specific hukou-based discriminatory practices that benefit them, although this does not mean that in their daily lives they treat migrants as social equals.
71. For my summary of Chinese attitudes across the three surveys, see Whyte, “China’s Dormant and Active Social Volcanoes.” The comparative data are from the International Social Justice Project (ISJP) surveys in other post-socialist and advanced capitalist countries. For details, see Whyte, Myth of the Social Volcano; Whyte, “China’s Dormant and Active Social Volcanoes.”
72. The percentage of respondents who expected their family incomes to increase during the next five years actually rose from 62 percent in 2004 to 76 percent in 2014, while the percentage who agreed with the dubious statement that “hard work is always rewarded” remained steady at about 60 percent in all three China surveys. In none of the ISJP countries surveyed was there anything close to these levels of optimism (for details, see Whyte, “China’s Dormant and Active Social Volcanoes”).
73. For example, the percentage of China respondents who agreed that the government should provide a minimum income guarantee to all rose from 81 percent in 2004 to 89 percent in 2014, with the latter figure among the highest compared to ISJP country surveys, much higher than the 56 percent of Americans who expressed this view.
74. See Martin King Whyte and Dong-Kyun Im, “Is the Social Volcano Still Dormant? Trends in Chinese Attitudes toward Inequality,” Social Science Research 48 (November 2014): 62–76.
75. Deborah Davis, “Urban Households: Supplicants to a Socialist State,” in Chinese Families in the Post-Mao Era, ed. Deborah Davis and Stevan Harrell (Berkeley: University of California Press, 1993), 50–76.
76. With regard to youth unemployment, one popular theme in the Chinese media since 2020 is the claim that many young Chinese feel they face “involution” (neijuanhua), having to work ever harder just in order not to fall behind, with some becoming so discouraged that they decide instead to “lie flat” (tangping) and stop trying, a syndrome that Xi Jinping has denounced. See Barclay Bram, “Involution: The Generation Turning Inward and Away from Xi’s Chinese Dream,” Asia Society Policy Institute, November 9, 2022, https://asiasociety.org/policy-institute/involution-generation-turning-inward-and-away-xis-chinese-dream.
77. In the summer of 2023, Scott Rozelle began collaborating with colleagues in China to insert selected inequality attitude questions from the CIDJP surveys into new online surveys those colleagues have been conducting. Preliminary results reported by Rozelle suggest that there has indeed been a major shift toward more negative views among Chinese citizens regarding opportunities to get ahead and whether becoming rich depends on individual merit versus societal unfairness. However, until these new surveys are completed and the responses weighted to approximate the nationally representative samples used in the CIDJP face-to-face surveys, a process that will not be finished until after this volume goes to press, it will not be possible to judge definitively how much Chinese popular attitudes on distributive justice issues may have soured.

5. Pliable Citizenship: Migrant Inequality in the Xi Jinping Era

Notes

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