Good News on the China Econ Rebalancing Effort

2010-02-03

The increase in inequality in China has leveled off in recent years and could be less severe than previously thought, the Organization for Economic Cooperation and Development says, suggesting that Beijing is starting to make progress in tackling one of its biggest social problems. (WSJ)

The income gap has been one of the big problems with China's high growth over the past couple of decades. In the past few years, it has seemed like during the boom times, the rich get richer (and the poor move upwards much more slowly), while during tough times like last year, the rich still do OK (and the poor take the hit). So the income gap has widened continuously.

The OECD data must come as great news by Hu Jintao and the PRC leadership. What will most likely be the big legacy of Hu will be his attempt at rebalancing the economy and managing growth. The driving econ policy of the past couple of years has moved away from growth-at-all-costs to a managed growth that takes things like the income gap and environmental issues into account.

Is this data evidence that the Hu and Wen rebalancing effort has been successful? Way too early to tell, but it definitely provides evidence to bolster their position.

Tags: China Business & Economy