What continues to be China’s strength is that the population is so huge that no one local example of egregious corruption has any effect on anything as might happen and does happen in a more typically sized country.
As usual, local corrupted have fallen in love with real estate and that is how the cash mostly comes into the market. This is a good harmless outlet and avoids more troublesome parts of the economy. When you think about it all, there is nothing less relevant than the ownership of a condominium.
There is way more liquidity in the Chinese consumer market than anticipated and more needs to trickle down through the population.
By Bloomberg News - Aug 11, 2010 10:22 PM PT
Aug. 11 (Bloomberg) -- Barry Bosworth, senior fellow at the Brookings Institution, discusses
’s industrial output and impact on the global economy. China’s industrial output rose the least in 11 months, retail sales growth eased and new loans climbed less than estimated, adding to signs that a slowdown in the world’s third-biggest economy is deepening. Bosworth talks with Betty Liu on Bloomberg Television’s “In the China Loop.” (Source: Bloomberg)
The money, much of it likely “illegal or quasi-illegal,” equates to about 30 percent of China’s gross domestic product, the study, conducted for Credit Suisse AG and published last week by the China Reform Foundation, found. The average urban disposable household income in
is 32,154 yuan, or 90 percent more than official figures, according to the report. China
Most of that extra cash is going to the wealthiest families. The top 10 percent of
’s households take in 139,000 yuan a year, more than triple the official figures, according to the Credit Suisse report. In contrast, the bottom 10 percent earns 5,350 yuan, or 13 percent more. The top 20 percent of households account for 81.3 percent of total hidden income, according to the study, written by Wang Xiaolu of the Beijing-based foundation. China
The findings indicate
’s wealth gap between rich and poor, already one of the world’s highest, is even wider than official figures show. Reducing income disparities is a top goal of President Hu Jintao and Premier Wen Jiabao, who want to stave off riots, strikes and other social unrest that might threaten the six-decade rule of the Communist Party. China
The “grey income” comes from many sources, including gifts to officials at weddings, profits from land transfers, kickbacks from construction projects, and payoffs from state monopolies such as the tobacco industry, the study said.
“Once government power is united with capital, the free competition of the market economy begins to be replaced by a monopoly of crony capitalism, leading to disparity in income and property distribution, lower economic efficiency and acute social conflicts,” Wang wrote in his report’s conclusion.
The study, compiled in 2009, is based on interviews with families in more than 4,000 urban households in 64 cities and 19 provinces, and uses 2008 data.
Its findings suggest that household income is a much higher percentage of GDP than official figures show, helping explain a surge in spending on luxury goods.
Gucci, a subsidiary of Paris-based PPR SA, last year opened a store in
Hebei’s provincial capital of , selling snakeskin purses for more than $4,000, about twice the city’s official annual per-capita income. Munich-based Bayerische Motoren Werke AG said sales in Shijiazhuang surged 82 percent to 13,852 cars last month from a year earlier. China
The figures make sense of the wealth accumulated by local officials, often revealed during corruption trials. Hao Pengjun, a former county mine official in northern
China’s province, was jailed for 20 years in April for taking in 305 million yuan illegally, the People’s Daily reported. Hao owned 35 properties in Shanxi Beijing including 17 in one development, according to the Evening News. Shanxi
Zhang Yingxiang, a spokeswoman for China’s National Bureau of Statistics in Beijing, said she hadn’t seen the study and said the bureau didn’t track grey income. She wouldn’t say whether
’s households had a substantial amount of hidden wealth. China
--Michael Forsythe in Beijing, with assistance from Nerys Avery and Ying Diao in Beijing. Editors: Bill Austin, Paul Tighe
To contact Bloomberg staff on this story: Michael Forsythe in
+8610-6649-7580 email@example.com; Beijing