With the rise of China's middle and upper classes, Chinese income inequality has soared. Whereas China used to have more equal income distribution than the US prior to former leader Deng Xiaoping’s introduction of market economics in 1978, the past 35 years have seen income inequality climb to a point where it matches or exceeds that of the US.
The key factor in rising inequality in China, though, is not economic policy or flawed taxation, but the huge shift of labor from rural farming to urban manufacturing and services. As the Harvard Business Review recently pointed out, China is experiencing the same inequality brought on by industrialization that the US and the UK witnessed more than a century ago – a period when each country reached peak income inequality.
