The Problem of Income Inequality in China

In the US, roughly 80% of GDP is household income. In Europe, it's 70% to 80%. So if you have a problem in the distribution of income, it's probably due to inequality. China has terrible income inequality - at US levels or even higher. The real problem is that local governments retain a very high share of GDP which isn't being recycled back to the household sector. That kind of institutional change requires such deep institutional change and so much opposition from groups that benefited from the old model.

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