Over the past four decades, China has transformed from a society with modest income differences and little private wealth into one of the most unequal countries in the world, rivaling the United States and Russia. In an article published in The China Journal, Andrew Walder argues that this outcome cannot be explained by elite capture or privatization alone but instead reflects enduring institutional legacies of China’s state socialist model. These institutions—household registration (hukou), state ownership of land, a fortified state sector, bank-dominated finance, production-based taxation, and a fiscal system favoring central priorities—systematically redirect income away from households and toward corporations and government. Despite the state’s unusually strong fiscal capacity and control of assets, redistribution through taxation and social policy is minimal. Wealth taxation is virtually absent, while local governments rely heavily on land expropriation and real estate development, further deepening inequality. The result has been rising concentrations of wealth and the gradual emergence of a propertied oligarchy tied to political structures. Walder concludes that reducing inequality would require reforms to taxation, fiscal distribution, and state-owned enterprises, but entrenched institutions make such change difficult.