Rising income and wealth inequality (measured by the Gini coefficient) have marked the last three decades of China’s remarkable economic transition from a centrally planned economy to an increasingly market-oriented one. When analysing the causes of China’s inequality, researchers frequently invoke rapid trade integration, technology, human capital differences and social security systems, but very little has been said about the role of monetary policy and the banking system.
Corporate tax policy says more about power than anything else does. Corporations seek to minimise the tax they pay – and, while governments ordinarily try to maximise their revenues, in the case of transnational corporations (TNCs) they understand that they have to tread carefully. Governments have come to accept that they hold fewer and fewer cards as capital has become more mobile.