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China Central Bank Adviser: Common Prosperity Requires Lowering Gini Coefficient

A People’s Bank of China adviser believes that, to achieve Xi Jinping’s common prosperity, China must lower the Gini coefficient, which measures income inequality, to below 0.4. Cai Fang, a member of the Monetary Policy Committee of the central bank, made this remark at a forum that Caijing magazine  hosted on November 27 and 28, 2021.

Cai stated that China’s Gini coefficient should drop from the current 0.47 to close to 0.4 and, by 2035, it should drop close to 0.35. He added, “If it is higher than 0.4, we cannot say that this is common prosperity.”

Cai, who is also an economist at the Chinese Academy of Social Sciences, said that China needs to reduce inequality through a redistribution of its national income. It should also increase the supply of social welfare and a reduction of the Gini coefficient.  There is “a lot of work to do.” China must use different means and ways of the first, second, and third distribution of national income to build an olive-shaped social structure with middle-income groups as the main body. It is more important to create a public service system covering the entire life cycle of the people.

According to China’s National Development and Reform Commission,  the first distribution of wealth comes through market competition. The second is achieved through taxes, subsidies, and social welfare programs. The third distribution taps enterprises and individuals to redistribute their wealth through voluntary donations.

The Gini coefficient measures the degree of equality in the income distribution of residents in a country or region. A value of 0 means complete equality. According to data from the National Bureau of Statistics of China, China’s income Gini coefficient reached the highest point of 0.49 in 2008 and then fell to 0.47 in 2020. According to OECD estimates this year, the average Gini coefficient in developed countries is 0.314.

Sources:, November 28, 2021

Zaobao, November 29, 2021

China National Development and Reform Commission, September 24, 2021