The Chinese government is seeking to narrow the income gap as part of efforts to spur consumer demand and reduce the economy’s reliance on investment for growth. Following the launching of the 12th five year plan by the government in 2010, the Chongqing province has become the country’s first province to reveal its country’s Gini coefficient.
The Gini coefficient is developed to measure the degree of concentration (inequality) of a variable in a distribution of its elements. This line assumes that each element has the same contribution to the total summation of the values of a variable. The Gini coefficient ranges between 0, where there is no concentration (perfect equality), and 1 where there is total concentration (perfect inequality). A higher Gini coeficient indicates that there is a high rate of inequality in income distribution, thus, an indication of a widening poverty gap.
According to China daily, Chongqing vowed to reduce its Gini coefficient rating of 0.42 to 0.35 by 2015 in a government work report distributed to the local people’s congress and political advisory body on January 9.
For the world’s most populous nation and the second largest economy, the widening wealth gap is an obvious obstacle on the road to a “xiaokang” — moderately prosperous – society. Also, a rating of 0.4 is internationally recognized as a benchmark for a high risk of social instability. Chongqing Mayor Huang Qifan said in a report by China Daily that the city’s government will work to reduce its Gini coefficient rating to around 0.35 during the 12th Five-Year Plan (2011-2015) period.
Leaders of the Communist Party of China (CPC), had included the formulation of some principles to down the rate of Gini coefficient in the China’s 12th Five-Year Program (2011-2015).
Local political consultative conference member Yang Hong told China Daily that declaring such a Gini coefficient score reduction as a goal shows guts on the government’s behalf. It puts people’s livelihoods first and goes against the established vested interests.
China’s economy expanded more than 10-fold since former leader Deng Xiaoping introduced pro-market reforms in the late 1970s.