Shadow incomes soar without accountability

10:18, August 26, 2010      

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By Liang Fei

Under-the-table income in China has been estimated to have reached 5.4 trillion yuan ($794.16 billion) in 2008, ac-counting for about 15 percent of the country's gross domestic product, according to research conducted by the National Economic Research Institute of China Reform Foundation.

"Shadow income" comes in two varieties: personal income that is neither clearly legal nor illegal, and also illegal kickbacks for which no concrete evidence can be found to prove criminality.

The institute stated that the top 10 percent of China's households earn 139,000 yuan ($20,446.9) a year; more than triple the official figures. And the bottom 10 percent earn 5,350 yuan ($786.99) annually, 13 percent more than what is actually being reported.

Needless to say, officials at the National Bureau of Statistics (NBS) was not pleased with Wang's findings.

Two articles were posted on their official website in the past two days arguing that shadow incomes have been overestimated due to flaws in Wang's research methodology.

One article said that the sample cannot fully represent the real income picture of Chinese citizens, since the surveyed families were mainly in the high income bracket.

Wang Wednesday told the Global Times, however, that the article mischaracterized his sample and that it indeed is representative. It is not possible that the shadow income is overestimated, he said. "Based on what we found during the research, it is only possible that the number is underestimated."

In China, people usually feel reluctant to reveal their real income, one article even admitted in the midst of a rebuttal against Wang's research.

"This is the main reason for the large amount of untracked income," the article said.

Source: Global Times


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