And according to Bai Chongen from Tsinghua University, an average worker in China has to pay social insurance amounting to 40 percent of his income. The World Bank said that China has the highest social insurance fee among 181 countries worldwide.

Meanwhile, the Ministry of Land and Resources said that the State made a profit of 2.7 trillion yuan in 2010 from land sales, a 70 percent increase on 2009. That is a transfer of wealth to the government in which farmers suffer much loss.

In recent years, the government has increased its input in social welfare and public services, which means money is being transferred to individuals and will help alleviate social disparity.

But the government's enormous revenues have not been used sufficiently to improve the welfare of the people as a large proportion is used for direct investment and government administration.

The realty market is a good mirror to reflect the wealth gap in China. While the value of urban properties have greatly increased in recent years it is a different story for farmers whose houses, built by themselves on their own land, cannot easily be traded.

Most residents still rely heavily upon wages as their main source of income. According to a 2010 report of Lee Kuan Yew School of Public Policy at the National University of Singapore, wages accounted for 66.2 percent of urban residents' annual income in China in 2008, while income from their assets accounted for only 2.27 percent.

Furthermore, according to Zhong Wei, a professor from Beijing Normal University, capital's exploiting of labor, inequalities in land profits, as well as the negative interest rates are all eroding the wealth of ordinary people every day.

And speculation and behind-the-scenes trading are rampant, while small shareholders have no choice but to suffer. In 2010 alone, trillions of yuan perished in the stock market, bringing losses to 70 percent of the investors. That further deprived the people of their wealth and widened social inequality.

The author is a professor from Tsinghua University.