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Wealth Accumulation and Distribution in Urban China

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Author Info
Xin Meng

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Abstract

Under socialism it was neither possible nor necessary to accumulate significant levels of personal wealth. The acceleration of economic reform in the last decade, however, has brought dramatic increases in income and investment opportunities. Reform has also reduced social protections provided by the state welfare system. In response to these changes, between 1995 and 2002, urban average real household net total wealth increased by 24% per annum. There is a concern, however, that those accumulating wealth are the economic and political elites, while those unable to accumulate wealth are the most vulnerable workers, who are losing social protection. Using Chinese urban survey data of 1995, 1999, and 2002, this article investigates this issue. It is found that households with above-average income have accumulated more wealth than their poorer counterparts. In addition, a large proportion of this wealth accumulation may be from nonearned sources, such as buying larger and better housing at highly subsidized prices. Furthermore, party members and their children have benefited a great deal from this fast wealth accumulation process. Although at lower rates, the poor and vulnerable have also been able to accumulate wealth.

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File URL: http://www.journals.uchicago.edu/cgi-bin/resolve?id=doi:10.1086/516761
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Article provided by University of Chicago Press in its journal Economic Development and Cultural Change.

Volume (Year): 55 (2007)
Issue (Month): ()
Pages: 761-791
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Handle: RePEc:ucp:ecdecc:v:55:y:2007:p:761-791

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  2. Wang, Yan, 1995. "Permanent Income and Wealth Accumulation: A Cross-Sectional Study of Chinese Urban and Rural Households," Economic Development and Cultural Change, University of Chicago Press, vol. 43(3), pages 523-50, April.
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  4. Azizur Rahman Khan & Keith Griffin & Carl Riskin, 1999. "Income Distribution in Urban China during the Period of Economic Reform and Globalization," American Economic Review, American Economic Association, vol. 89(2), pages 296-300, May. [Downloadable!] (restricted)
  5. Davies, James B. & Shorrocks, Anthony F., 2000. "The distribution of wealth," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 11, pages 605-675 Elsevier. [Downloadable!] (restricted)
  6. Meng, Xin, 2003. "Unemployment, consumption smoothing, and precautionary saving in urban China," Journal of Comparative Economics, Elsevier, vol. 31(3), pages 465-485, September. [Downloadable!] (restricted)
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  8. Appleton, Simon & Song, Lina & Xia, Qingjie, 2005. "Has China crossed the river? The evolution of wage structure in urban China during reform and retrenchment," Journal of Comparative Economics, Elsevier, vol. 33(4), pages 644-663, December. [Downloadable!] (restricted)
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  10. Ferreira, Francisco H. G., 1997. "Economic transition and the distributions of income and wealth," Policy Research Working Paper Series 1808, The World Bank. [Downloadable!]
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  11. Xin Meng, 2004. "Economic Restructuring and Income Inequality in Urban China," Review of Income and Wealth, Blackwell Publishing, vol. 50(3), pages 357-379, 09. [Downloadable!] (restricted)
  12. Knight, John B & Song, Lina, 1991. "The Determinants of Urban Income Inequality in China," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 53(2), pages 123-54, May.
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  13. Arie Kapteyn & Rob Alessie & Annamaria Lusardi, 1999. "Explaining the Wealth Holdings of Different Cohorts: Productivity Growth and Social Security," Tinbergen Institute Discussion Papers 99-069/3, Tinbergen Institute. [Downloadable!]
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  14. John Giles & Kyeongwon Yoo, 2007. "Precautionary Behavior, Migrant Networks, and Household Consumption Decisions: An Empirical Analysis Using Household Panel Data from Rural China," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 534-551, 05. [Downloadable!] (restricted)
  15. Morduch, Jonathan & Sicular, Terry, 2000. "Politics, growth, and inequality in rural China: does it pay to join the Party?," Journal of Public Economics, Elsevier, vol. 77(3), pages 331-356, September. [Downloadable!] (restricted)
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  16. Hongbin Li & PakWai Liu & Junsen Zhang & Ning Ma, 2007. "Economic Returns to Communist Party Membership: Evidence From Urban Chinese Twins," Economic Journal, Royal Economic Society, vol. 117(523), pages 1504-1520, October. [Downloadable!] (restricted)
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  17. Knight, J. & Shi, L., 1995. "Fiscal Decentralisation, Redistribution and Reform in China," Economics Series Working Papers 99168, University of Oxford, Department of Economics.
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