It’s a no-brainer that economic issues would be included in the agenda along with all the rest that China watchers can think of at the Beidaihe gathering. Remember the report by the Global Financial Integrity that revealed the illicit financial outflows from China from 2000 to 2011 amounting US$3.79 trillion? The average rate of illicit outflows is an increase of 7.2% per year in inflation-adjusted terms, just below the 10.2% average rate of economic growth. “Apart from the fact that rampant tax evasion—likely to be the largest component of illicit outflows—have reduced tax revenues, the loss of capital has directly contributed to a worsening of China’s income inequality. Indeed, increasing income inequality remains the soft underbelly of China’s impressive rise in the world economy and presents a serious challenge for maintaining social and political stability. That income inequality is a sensitive issue is borne by the fact that the government has not released official data on the Gini coefficient since 2000. Officials are doubtless aware that data on household income, which are obtained through government-sponsored surveys, are unlikely to reflect foreign holdings of illicit assets by high net-worth individuals, thereby understating the already bad news regarding income distribution.”(Illicit Financial Flows from China and the Role of Trade Misinvoicing, 2012) Addressing this is going to have an impact on Hong Kong for sure.
Posted on: Tue, 23 Jul 2013 04:02:37 +0000
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