The Bank of Korea: "China's Growth Rate Slowdown Negatively Impacts Redistribution Policy Implementation"

Publication of Overseas Economic Focus

[Asia Economy Reporter Jang Sehee] Amid the recent slowdown in China's growth, an analysis has emerged suggesting that this trend could weaken the momentum for pursuing redistribution policies in the future.

Yang Junbin and Kim Hyunik, researchers from the China Economy Team of the International Economics Department at the Bank of Korea's Research Bureau, stated in a report on the current state of income inequality and the evaluation of redistribution policy efforts in China, published on the 23rd in the weekly publication 'Overseas Economic Focus,' that "Considering recent concerns about the slowdown in growth and medium- to long-term growth targets, it is not easy for the Chinese government to boldly pursue policies that prioritize redistribution over growth."

Furthermore, they anticipated that the expansion of redistribution policies would be limited due to the rapid increase in fiscal expenditures and the difficulty in expanding tax revenues.

They also noted that uncertain corporate conditions and the challenges in resolving disparities between groups would negatively impact the implementation of redistribution policies.

Currently, as income inequality worsens within China, the fiscal function of income redistribution is very inadequate. According to the report, China's Gini coefficient (42.1) exceeds the average of upper-middle-income countries (40.5).

The report pointed out, "Such severe income inequality could threaten the legitimacy and stability of the system, making it an urgent issue that must be resolved in the future."