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Income Inequality and Distributive Justice: A Comparative Analysis of Mainland China and Hong Kong*

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Abstract

Over the past decades income inequality has been sharply increasing in both mainland China and Hong Kong, two Chinese societies that have distinct paths of institutional development. While previous studies on income inequality have attempted to document the trend and investigate its causes, this article focuses on people's perceptions of legitimate income inequality and how these perceptions are related to their attitude towards inequality. Analyses of data collected in separate population surveys in China (2005) and Hong Kong (2007) reveal a higher degree of tolerance of income inequality and a higher degree of perceived fairness of income distribution in Hong Kong than in the mainland. In both societies, such normative support for income inequality is positively associated with people's perceptions of opportunities.

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1 National Bureau of Statistics, China Statistical Yearbook 2005 (Beijing: China Statistical Publishing House, 2006).

2 Hong Kong Census & Statistics Department (Hong Kong C&SD), 2001 Census Summary Results, http://www.censtatd.gov.hk, accessed 20 February 2008; Hon-Kwong Lui, Income Inequality and Economic Development in Hong Kong (Hong Kong: City University of Hong Kong Press, 1997).

3 Chow Steven C. and Papanek Gustav F., “Laissez-faire, growth and equity – Hong Kong,” The Economic Journal, Vol. 91 (1981), pp. 466–85; Friedman Milton, Capitalism and Freedom (Chicago, IL: University of Chicago Press, 1982); Lui Hon-Kwong, Income Inequality; Khan Azizur Rahman and Riskin Carl, Inequality and Poverty in China in the Age of Globalization (New York: Oxford University Press, 2001), and “China's household income and its distribution, 1995 and 2002,” The China Quarterly, No. 812 (2005), pp. 356–84; Gustafsson Bjørn A., Shi Li and Sicular Terry (eds.), Inequality and Public Policy in China (New York: Cambridge University Press, 2008); Wang Feng, Boundaries and Categories: Rising Inequality in Post-Socialist Urban China (Stanford, CA: Stanford University Press, 2008).

4 Kuznets Simon, “Economic growth and income inequality,” American Economic Review, Vol. 45 (1955), pp. 128.

5 United Nations University-World Institute for Development Economics Research (UN-WIDER), World Income Inequality Database, http://www.wider.unu.edu/research/Database/en_GB/database/, accessed 10 September 2008. Even in this comprehensive database, a strictly comparable time-series data on China income Gini coefficients from 1978 to date are not available (see the discussion on Gini coefficients in the next section) except for Wu Ximing and Perloff Jeffrey M., “China's income distribution, 1985–2001,” Review of Economics and Statistics, Vol. 87 (2005), pp. 763–75.

6 Hong Kong C&SD, 2001 Census Summary Results; Hong Kong C&SD, 2006 Population By-census Summary Results, http://www.censtatd.gov.hk, accessed 20 February 2008.

7 Chung Jae Ho, Lai Hongyi and Xia MingMounting challenges to governance in China: surveying collective protestors, religious sects and criminal organizations,” The China Journal, Vol. 56 (2006), pp.131; Ma Josephine, “Wealth gap fueling instability, studies warn,” South China Morning Post, 22 December 2005. Indeed, the Hu Jintao and Wen Jiabao leadership that took command in China in 2002–03 have announced a number of dramatic policy changes to address the anger and discontent over increasing inequality.

8 To win back public support, Mr Tung Chee-hwa, the former Chief Executive, made poverty alleviation a key theme in his 2005 annual policy address. The government set up a new Commission on Poverty, chaired by the Financial Secretary, with inter-generational transfer of poverty at the top of its agenda. See Henry Tang, “Expectations towards the Commission on Poverty,” speech delivered by the Financial Secretary, 2 March 2005, http://www.info.gov.hk/gia/general/200503/02/03020298.htm, accessed 20 February 2008; Lee Cheuk-yan, “Testimony on democracy in Hong Kong before the subcommittee on East Asia and Pacific Affairs of the United States Senate Committee on Foreign Relations,” 4 March 2004, http://foreign.senate.gov/testimony/2004/Cheuk-yanTestimony040304.pdf.

9 Wegener Bernd, “Political culture and post-communist transition – a social justice approach: introduction,” Social Justice Research, Vol. 13 (2000), pp. 7582; Martin K. Whyte and Maocan Guo, “How angry are Chinese citizens about current inequalities? Evidence from a national survey,” forthcoming, Social Transformation in Chinese Societies, Vol. 3.

10 For a similar kind of comparison, see Wegener Bernd and Liebig Stefan, “Is the ‘inner wall’ here to stay? Justice ideologies in unified Germany,” Social Justice Research, Vol. 12 (2000), pp. 177–97.

11 Allison Paul, “Measure of inequality,” American Sociological Review, Vol. 43 (1978), pp. 865–80; Liao Tim Futing, “Measuring and analyzing class inequality with the Gini Index informed by model-based clustering,” Sociological Methodology, Vol. 36 (2006), pp. 201–24.

12 Sisci Francesco, “Is China headed for a social ‘red alert’?Asia Times, 20 October 2005; Ma, “Wealth gap fueling instability.”

13 UN-WIDER, World Income Inequality Database.

14 Hong Kong C&SD, Thematic Report: Household Income Distribution in Hong Kong, 2007, p.111, http://www.censtatd.gov.hk, accessed 1 March 2008.

15 Li Yining, “Li Yining on the issue of reducing income gap,” Guangming Daily, 7 January 2002.

16 Whyte and Guo, “How angry are Chinese citizens.”

17 Ibid.; Kreidl Martin, “Perceptions of poverty and wealth in Western and post-communist countries,” Social Justice Research, Vol. 13 (2000), pp. 151–76; Wegener, “Political culture and post-communist transition.”

18 Aristotle , Nicomachean Ethics, trans. Ross W.D. (Oxford: Clarendon Press, 1995 [1908]).

19 Davis Kingsley and Moore Wilbur E., “Some principles of stratification,” American Sociological Review, Vol. 10 (1945), pp. 242–49.

20 Waley Arthur, The Analects of Confucius (London & New York: Routledge, 1995[1938]).

21 Hu Jintao, “Speech in the Fourth Plenary Session of the 16th Central Committee,” 19 September 2004, http://www.xinhuanet.com/newscenter/zht0919/xgzl.htm, accessed 20 February 2008.

22 Li Yining, “Reducing income gap”; Zhang Weiying, “Market reform and income distribution,” http://www.chinahrd.net/zhi_sk/jt_page.asp?articleid=138311, accessed 19 February 2008.

23 Estulin Chaim, “Hong Kong's new culture,” The Times, 17 January 2005.

24 Ho Ping-Ti, The Ladder of Success in Imperial China (New York: Columbia University Press, 1967); Whyte and Guo, “How angry are Chinese citizens.”

25 Jianhui Liu, “Equity is a must but equality is not,” 2005, http://en.ce.cn/Insight/200511/30/t20051130_5362706.shtml, accessed 20 February 2008.

26 For example, analyses show that Chinese people tend to tolerate merit-based inequalities. In the 2003 Chinese General Social Survey, respondents were asked “who should get a higher income?” 64% of respondents said “professionals and highly educated,” 13.7% said “workers” and 12.8 % said “state cadres or managers in state or collective owned enterprises” should earn more. Chinese people stress much more than many other societies that merit-based attributes are the main reasons why some people are poor while others are rich. See Bian Yanjie, Chinese General Social Survey 2003: Technical Report and Users' Manual (Hong Kong: HKUST Survey Research Center, 2005); Whyte and Guo, “How angry are Chinese citizens.”

27 Alwin Duane F., “Distributive justice and satisfaction with material well-being,” American Sociological Review, Vol. 52 (1987), pp. 8395; Jasso Guillermina, “A new theory of distributive justice,” American Sociological Review, Vol. 45 (1980), pp. 332, and “How much injustice is there in the world? Two new justice indexes,” American Sociological Review, Vol. 64 (1999), pp. 133–68; Kelly Jonathan and Evans M.D.R., “The legitimation of inequality: occupational earnings in nine nations,” American Journal of Sociology, Vol. 99 (1993), pp. 75125; Kelley Jonathan and Zagorski Krzysztof, “Economic change and the legitimation of inequality: the transition from socialism to the free market in Central-East Europe,” Research in Social Stratification and Mobility, Vol. 22 (2005), pp. 231366.

28 While the official technical report of “the China General Social Survey 2005” has not yet been released, the research designs and implementation are similar to those in CGSS 2003. See Yanjie Bian, China's General Social Surveys 2003. The response rate in CGSS 2005 is 53%. In China, as elsewhere, very rich people are less likely to participate in surveys. However, given its tiny size, the under-representation of this group will not have a substantial impact on the national averages of tolerance of income inequality (also see the discussion on a similar issue Khan and Riskin, “China's household income,” n. 3).

29 Hong Kong Census and Statistics Department, 2006 Population by-Census Summary Results; Wu Xiaogang, Hong Kong Social Stratification and Mobility Survey: Technical Report and Users' Manual (Hong Kong: HKUST Survey Research Center, 2008).

30 In the Chinese survey, respondents were asked: “According to the local living standards, in your opinion, a household with 3–4 members can be considered ‘poor’ if the average monthly income is below _____ and ‘rich’ if the average monthly income is _____ or above.” In the Hong Kong survey, respondents were asked: “According to recent statistics, the household median income was HK$17,100 in Hong Kong in 2006 (with a household size of 3). In your opinion, what average monthly household income would mean that the household was ‘poor’? What average monthly household income would mean that the household was ‘rich’?”

31 Osberg Lars and Smeeding Timothy, “‘Fair inequality’: attitudes towards pay differentials: the United States in comparative perspective,” American Sociological Review, Vol. 71 (2006), pp. 450–73.

32 Kelley and Zagorski, “Economic change and the legitimation of inequality.”

33 Treiman Donald J., Occupational Prestige in Comparative Perspective (New York: Academic Press, 1977); Kraus Vered, Schild E. O. and Hodge Robert, “Occupational prestige in the collective conscience,” Social Forces, Vol. 56 (1978), pp. 900–18.

34 The selected occupational categories cannot be matched exactly to respondents' own occupations. In many cases, approximately similar occupations are used in this exercise.

35 Despite the fact that the list of occupations in China and Hong Kong is not identical to the list in ISSP, it is modified based on the ISSP questions and covers the major occupations. The comparisons of the “do earn” and “should earn” Gini index are informative.

36 Osberg and Smeeding, “Fair inequality,” pp. 450–73.

37 World Bank, World Development Report (New York: Oxford University Press, 2007).

38 For example, the appointment of Wong Yan Lung, the son of a street peddler, as Secretary for Justice was termed a “Hong Kong story.” The appointment of K.C. Chan, the son of a taxi driver, as Secretary for Financial Services and the Treasury was seen as another “Hong Kong legend” by the local media.

39 Kelley and Zagorski, “Economic change and the legitimation of inequality.”

40 Li Yining, “Reducing income gap.”

41 Rawls John, A Theory of Justice (Cambridge, MA: Harvard University Press, 1971), pp. 45.

* This article was presented at the “Social Inequality and Social Mobility in Hong Kong” Conference at the Chinese University of Hong Kong, 14 March 2008. The author is grateful for financial support from the Hong Kong Research Grants Council via a Public Policy Research Fund (HKUST6003-PPR20051) for the data collection in Hong Kong and a Competitive Earmarked Grant (HKUST6424/05H) for his research on social inequality in China.

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