Introduction

China's reform and openness have now been ongoing for a quarter century. During this important period, while China's economy has developed rapidly and personal incomes have increased, changes in income distribution, especially rising income inequality, have raised social concerns. Income and wealth are closely correlated. The people's well-being depends not only on incomes but also on the level and distribution of wealth (Schneider 2004, pp. vii, 6). Since 1990 China has experienced a period of rapid accumulation of personal wealth combined with unequal distribution of that wealth. The country has established the objective of constructing a well-off society. The issue of wealth distribution thus has become a new focus of concern.

In this chapter wealth, also called property or assets, includes land, housing, and individual savings or holdings of other financial instruments, among other factors. Here the terms wealth, property, and assets are used as synonyms, but in different ways and from different points of view. When we link these assets with ownership we use the term “property rights.”

Wealth and income are different concepts. Here income refers to all earnings of a person or a household in a certain period of time (usually a year). Wealth refers to the net monetary value of all assets at a certain point of time. In other words, wealth is the stock of all property at a certain point, while income is a flow of earnings in a time period. Obviously, income and wealth are interrelated.