China to move towards mixed ownership economy to check economic slowdown

The Chinese leadership of Communist Party of China (CPC) has decided to allow more private capital into the market including equity stakes in projects with state funds with the intention to develop a mixed ownership economy.

The Chinese leadership has decided to:

  • Allow non-state-owned capital to acquire equity stakes in projects featuring investment by state-owned capital, and employees of multi-ownership enterprises will be allowed to hold shares in their companies.
  • Develop mixed ownership to improve the basic economic system while keeping the role of public ownership dominant, with the state-owned economy playing a key role, while encouraging the non-public sector to flourish.
  • Allow cross shareholding of state capital, collectively owned capital and non-public capital to maintain and increase the value of stated assets and achieve common development of various ownerships.
  • Provide support for the development of the private economy, and stimulate its vitality and creativity.
  • Protect of property rights in the public sector as well as in the non-public sector.
  • Enhance regulation of income secondary distribution through taxation.
  • Establish an information system on personal income and property to narrow income gaps between urban and rural areas, different regions and sectors.
  • To create a standardized risk-warning system to handle government debts in a better way.

China has the highest Gini coefficient index, reflecting the disparity between rich and poor reached 0.474 in China in 2012, higher than the warning level of 0.4 set by the United Nations.

What is Gini coefficient?

The Gini coefficient (Gini index or Gini ratio) is a measure of statistical dispersion intended to represent the income distribution of a nation’s residents. It was developed by the Italian statistician and sociologist Corrado Gini.

A Gini coefficient of 0 expresses perfect equality, where all values are the same (for example, where everyone has an exactly equal income). A Gini coefficient of 1 (or 100%) expresses maximal inequality among values (for example where only one person has all the income).

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