Expert refutes criticism of his report on hidden incomes

11:59, August 26, 2010      

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Wang Xiaolu, an expert with China Reform Foundation, who recently said that real income levels of Chinese households are much higher than official data shows, is rebutting the criticisms leveled by two officials toward the so-called "flaws" within his report.

He said in a recent report that China's households hide as much as 9.3 trillion yuan (around 1.37 trillion U.S. dollars) of income that is not reported in official figures, with 80 percent accruing to the wealthiest people.

China's National Bureau of Statistics (NBS) yesterday published articles written by two of its officials on its Web site, arguing that Wang's report is "unreasonable" and has flaws in the methods of choosing survey samples and making calculations.

Hidden incomes "only explanation" for hot realty market

According to Wang's calculations, the country's urban per capita disposable income reached 32,154 yuan (4,728.5 U.S. dollars) in 2008, double the official figure, while total urban incomes would then account for 73.9 percent of the GDP.

The huge hidden income indicates that China's economy is larger than normally acknowledged, with a wider gap between the rich and the poor and shows that labor income accounts for a smaller portion of GDP, Wang said.

Regarding the doubts, Wang said that the data from the NBS showed that housing price-income ratio in China's urban regions has always stayed at around 10-to-1.

"But the hot realty market is very confusing to researchers both at home and abroad," he said. "The only explanation is that the incomes of the rich families are much higher than those shown in the official statistics."

The flaws "do not exist"

"There are many flaws in the report, such as the way survey samples are chosen and calculations are made, and the final result is significantly higher (than the actual level)," said Shi Faqi, an official with the NBS, in a bylined article posted on the bureau Web site.

Wang said that the report has already noted that it can only "correct" the systematic errors in the data collected in existing samples and should not be applied to estimate the general incomes distributions of urban residents.

In fact, the report's calculations on the income levels of low-income and middle class families are very close to official data. The hidden incomes are found in the richest families, and the two surveys conducted in 2007 and 2010 have given similar results.

The two officials from the NBS also doubted Wang's method of using Engel's Coefficient to calculate residents' income levels, as income level is not the only thing that affects the coefficient.

Wang said that the solutions to this problem was already presented in the report, and the influence of other factors on Engel's Coefficient was already "eliminated."

As to whether urban residents' income levels and hidden incomes are overestimated, Wang pointed out that the doubt from the two officials can raise doubt on itself, and they also failed to give overwhelming evidence that the hidden incomes are overestimated.

"The distribution of Chinese urban residents' hidden incomes showed in this year's report is similar to the one published in 2007 and conforms well to the data of household savings and figures of the property and auto markets," Wang said.

People's Daily Online/Agencies


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