This is a favorite topic of mine, probably because it brings together economics, politics and policy, and business. In fact, it’s difficult to talk about a major issue in China these days without straying into a discussion about the income gap.

It would be nice, though, if we were at least all on the same page at the beginning of the discussion. Perhaps that’s a bit too much to ask; China economic statistics are notoriously fuzzy, for a variety of reasons. Moreover, income inequality is sort of a hot button political issue, so you never know if politics has been inserted somewhere along the way.

All that being said, here’s some anecdotal information that suggests we should be skeptical of the numbers. This information comes from a Southern Weekend article, which was translated into English by China Digital Times. Here’s the excerpt:

Scholars who study the disparity between China’s rich and poor say a lack of data is their biggest problem. As a result [of the data shortage], there is no way to conduct detailed analysis and research.

“People care most about the  Gini coefficient’s [measure] of the national income gap. However, you can see that use of household data estimates from the national Gini coefficient occurred only during certain years.” Professor Li Shi told Southern Weekend that the official statistics bureau has already collected nearly 20 years of survey data on households, “but they have not been made available to researchers.”

Li Shi believes that in regards to the international standard definition of personal income, “the data we can see have always been underestimated. Many personal incomes were not included in the statistical range.”

Currently, the data for Chinese scholars researching the Gini coefficient come from urban and rural household survey teams from different parts of the country. However, the accuracy of data from these “household surveys” has frequently been strongly criticized.

For a while, statistics systems measuring urban and rural personal incomes have used two metrics: in the country side, “per capita cash income,” but in the city, “per capita disposable income.”

In reality, these two income standards do not conform to international ones, and to a large degree, the income disparity between urban-rural residents has been underestimated.

The numbers that we are already working with are bad enough, and China has been criticized for a widening of the income gap in recent years (the U.S. has the same problem, by the way). If the income gap is that much worse, I’m going to have to redouble my posts on the subject and further encourage the policies of the current Hu/Wen administration.

The scary implication here is that the problems allegedly associated with the wide income gap (social unrest, violence, property crimes) may not be going away anytime soon. Not good news.