The Missing Rich and Wealth Polarization in 21st Century China

Abstract

This study examines the evolution of wealth polarization in China during the 21st century using data from the Chinese Household Income Project (CHIP) and the Top Incomes in China (TIC) databases. Our findings indicate a notable increase in wealth polarization between 2002 and 2013, followed by stabilization and a subsequent downward trend through 2018. Although household surveys often underreport wealth polarization due to undercoverage of top earners, our analysis demonstrates that incorporating additional data from high-net-worth individuals does not change the observed reduction in wealth inequality from 2013 to 2018. Heterogeneous analyses indicate that the polarization trends among rural, urban, female, and male residents align with the overall trend. However, urban and male residents contribute more significantly to the overall polarization compared to rural and female residents. These results hold consistent across various methodologies, including parametric modeling, alternative polarization indices, and expanded top-income samples.

Keywords: Wealth polarization, Wealth inequality, Top incomes, Power law, Inequality in China