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Time:March 24-26, 2018
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【Zheng Yongnian】Economic Inequality and China’s Long-term Economic Development

China registered an economic growth rate of 6.9% in 2017. Since 2014, China’s economy has entered a new normal, which sees China’s GDP growth has slowed down, from an average two-digit rate over the past three decades to about 7%; in other words, the economic growth has shifted the gear from a high speed to a medium-to-high speed. As shown by the world economic history, though it is impossible to maintain a high growth speed all the time since it is an objective trend that the growth rate will decrease progressively, it is very important to achieve proper transition of the economy from high-speed growth to medium-to-high speed growth.  For a major economy, the big ups and downs not only undermine its development, but also exert huge external impact. Over the past years, China has smoothly changed its economic growth speed, exerting positive impact upon the domestic and international economic development. But in the long run, it remains an important issue to ensure China maintains its economic growth momentum.

Macroscopically speaking, globalization and technological progress are accelerating changes in the world economy and the changes always cause immense uncertainty to economic development. Judging by experience, if an economy gains the dividends brought by the changes and digests the negative results caused by the changes, it advances; if an economy gains the dividends but fails to digest the negative results, it faces a lot of risks; if an economy neither gains the dividends nor avoids the negative results, it has sunk in jeopardy.

Currently, most of the countries in the world are in the latter two circumstances, which is strikingly reflected in the extreme income inequality and the gap between the rich and the poor. Recently, the World Inequality Lab committed to collecting income and wealth distribution data and analysing the world inequality trend released the World Inequality Report 2018. The research team including the French prestigious scholar Thomas Piketty found that between 1980 and 2016, the top 1% income-earners of North America (US and Canada) and West Europe earned 28% of the total income while the bottom 50% got only 9%. Separately, the actual contrast in either North America or West Europe is even more striking and worse. In West Europe, the top 1% income-earners’ income growth equals that of the bottom 51%. In North America, the top 1% income-earner’s income growth equals that of the bottom 88%.

Inequality is intertwined with poverty. At present, as many as 45 million people live under the poverty line. Poverty leaves the poor more and more marginalized as they have no chance to be heard, so they have no way to affect the public policy. In result, inequality is exacerbated.

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