CNN: ‘Hidden income’ makes China’s rich wealthier than thought

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Hong Kong (CNN) — China’s urban rich are making far more than they officially report, suggesting the wealth gap in the world’s second largest economy is much higher than previously thought, according to a new study.

The China Society of Economic Reform released a survey Monday that found “gray income” was 6.2 trillion yuan (U.S. $1 trillion), or 12% of GDP. “Gray income” can range from illegal cash from kickbacks to unreported income and gifts.

“The result has highlighted expanding social inequalities and policy issues surrounding official corruption and income distribution,” said Wang Xiaolu, who led the research for the CSER, in an article in Caixin Online. “The richer the household, the more likely it receives shadow income.”

The study comes a day after Bo Xilai, a once high-flying politician, was sentenced to life in prison for bribe-taking,15 years for embezzlement and seven years for abuse of power. Bo is appealing the verdict.

The CSER surveyed 5,344 urban families in 18 Chinese provinces. The results suggest the top 10% of households earn nearly 21 times more than the poorest 10%. The National Bureau of Statistics places income disparity far lower, saying China’s wealthiest make 8.6 times more than its poorest. “China is in a dangerous zone as one the most unequal countries in the world,” Wang wrote.

The survey found that rich families gain 80% of their wealth from business and on average “have decent gains” in stock markets, whereas most middle and lower income families lose cash in the capital markets, Wang said. “We can’t rule out that some of these business gains are problematic, or even illegal, because many survey takers count kickbacks as business gains,” he wrote.

Much of the high gray income is linked to the loose credit handed out between 2009 and 2010, Wang wrote, as well as the rapid increase of government investment during the same period.

“To stop widening income disparity and unfair allocation, in addition to anti-corruption campaigns, there needs to be gradual but firm progress in economic, political and social reform that moves the country closer to the rule of law with public scrutiny over administrative power,” he said.

via Report: ‘Hidden income’ makes China’s rich wealthier than thought – CNN.com.

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The Effects of Germany ‘s Low Birth Rates

Human Imprint Synopsis: Germany Fights Population Drop – The New York Times

It is no surprise that a CORE country such as Germany has one of the lowest FERTILITY RATES in the World. But what may surprise some are the long-term socioeconomic effects that a low birth rate can bring. As Germany relishes one of the highest GDP’s in the World, it also means that more women are looking for long-term careers in spite of traditional values that support women to be stay-at-home moms. Due to Germany’s NEGATIVE POPULATION GROWTH, it is coming to grips with the reality that losing 1.5 million citizens (according to the last census) is weakening its strong economic system. Germany faces DEINDUSTRIALIZATION, a slumping housing market, high unemployment rates, and increasing retirement ages to ensure a tax base.

Germany also has a history of resisting immigration, and attitude that might need to change if it plans on sustaining a healthy economy. Not only is there a lack of young workers due to a low population growth rate, but if there is a high unemployment rate, Germany also faces a NET OUTMIGRATION of the working age that they have left. Though Germany is supporting of their AGING POPULATION in the workforce, bringing in MIGRANT WORKERS may be just what the doctor ordered. Until then, Germany is fighting with PRONATALIST POLICIES aimed at encouraging families to have children with tax break incentives and government subsidies to allow women to stay at home and raise a family.

Germany Negative Population Growth