INCOME GAP IN CHINA

INCOME GAP IN CHINA

Inequality has risen sharply in recent years despite government pledges to tackle it. Alarmed by the widening wealth gap in China after he saw a luxury car with a price tag of more than 100 million yuan ($15.7 million) at an auto show in Shanghai, former prime minister Zhu Rongji said: "Quite a few entrepreneurs even own private aircraft. But in the countryside, people in some places still do not have enough to eat. So many years after the Liberation [the founding of the People's Republic in 1949], rural residents still remain so poor.” [Source: Clifford Coonan Irish Times, January 22, 2011]

The gap between rich and poor reached its widest margin in 2009 since economic reforms were launched in the late 1970s with the urban capita income of about $2,500 being nearly three times the figure in countryside according to data released by China’s National Bureau of Statistics. In the large cities the gap is even more extreme. In 2008, Beijing’s per capita GDP was $9,085 while Shanghai’s was $10,529 in 2009. The Xinhua News Agency reported that the top 10 percent of the richest people earned 23 times more than the poorest 10 percent of people in 2007 - up from 7.3 times in 1988.

Average disposable annual income for Chinese urban residents in 2012 was the equivalent of about $4,000, an increase of 9.6 percent after taking inflation into account. Average rural net income was just under $1,300 per person, a rise of 10.7 percent after adjusting for inflation, the Chinese National Bureau of Statistics announced in January. The bureau also said that in 2012 China’s Gini coefficient, a widely used index of income inequality, was 0.474, slightly higher than levels of inequality in the United States, where income disparity now stands as one of the highest among advanced industrial nations. But some economists have said China’s measure is actually much higher, when illicit and poorly reported sources of wealth are taken into account. [Source: Chris Buckley, New York Times, February 5, 2013 ^^]

A survey released in July 2013 by Peking University survey found that households in the top 5 percent income bracket earned 23 percent of the nation’s total household income in 2012. The households in the lowest 5 percent accounted for just .1 percent of total income. The survey also showed a vast difference between earners in top-tier coastal cities and those in interior provinces. [Source: New York Times, July 19, 2013 <^>]

Edward Wong wrote in the New York Times:“Average annual income for a family in 2012 was 13,000 renminbi, or about $2,100. When broken down by geography, the survey results showed that the average amount in Shanghai was just over 29,000 renminbi, or $4,700, while the average in Gansu Province, in northwest China, was just 11,400 renminbi, or just under $2,000. Average family income in urban areas was about 16,500 renminbi, or $2,600, while it was 10,000 renminbi, or $1,600, in rural areas.” <^>

“The survey was conducted by the Chinese Family Panel Studies, a research program based at a social science institute of Peking University, one of China’s leading universities. According to Chinese news reports and a news release put out by the program, the survey’s findings were based on 73,000 hours of interviews with 14,960 households in five province-level areas, and on 57,155 people filling out questionnaires. <^>

“The survey gave a wide range for the unemployment rate in China: anywhere from 4.4 percent to 9.2 percent. It estimated China’s Gini coefficient to be .49 in 2012, less than the .51 in 2010. The Gini coefficient is an approximate measure of the scale of the wealth gap in a society, and the Chinese government avoided releasing an official number for several years. Then in January 2013, the head of the National Bureau of Statistics, Ma Jiantang, said the Gini coefficient was .474 in 2012, down from a peak of .491 in 2008.” <^>

China’s Income Inequality Surpasses U.S.

In the early 2010s, the income gap between the rich and poor in China surpassed that of the U.S. and is among the widest in the world, a report by the University of Michigan said. Lorraine Woellert and Sharon Chen of Bloomberg wrote: “A common measure of income inequality almost doubled in China between 1980 and 2010 and now points to a “severe” disparity, according to researchers at the University of Michigan. The finding conforms to what many Chinese people already say they believe -- in a 2012 survey, they ranked inequality as the nation’s top social challenge, above corruption and unemployment, the report showed. [Source: Lorraine Woellert and Sharon Chen, Bloomberg, April 29, 2014 \=\]

“The growing wealth disparity that accompanied China’s breakneck growth in the decade through 2011 has increased the risk of social instability in the world’s most populous nation and biggest developing economy. “Chinese recognize income inequality as a serious social problem; on the other hand, they seem to have high tolerance for income inequality,” said co-author Yu Xie, a sociology professor and a researcher with the university’s Institute for Social Research in Ann Arbor, Michigan. “They don’t like it, but they seem to accept it as a fact of life. Something they have to pay for fast economic growth.” \=\

“Using data from six surveys conducted by five universities in China, the University of Michigan researchers calculated a measure of income inequality, the Gini coefficient, and compared it to earlier estimates. In 2010, the Gini coefficient for family income in China was about 0.55 compared with 0.45 in the U.S. In 1980, the gauge in China was 0.30. A coefficient of 0.5 or higher indicates a severe gap between rich and poor, according to the report, which also said the Chinese government stopped releasing the data in 2000 when the gauge reached 0.41. A reading of zero means all income is evenly distributed and 1 represents complete concentration. \=\

“Since the 1980s, the rise of income inequality has been far more dramatic in China than in the U.S.,” the researchers wrote. Government policies that favor urban over rural residents and coastal over inland regions have contributed to the gap’s rapid growth in China, the report found. The official estimate for the income gap last year was about the same as in 2012, with the statistics bureau giving a Gini coefficient of 0.473, after 0.474 the previous year. That’s above the 0.4 level that the United Nations has said is a predictor of social unrest. The University of Michigan study will be published online this week in the Proceedings of the National Academy of Sciences of the United States of America.” \=\

Reasons for Income Inequality in China

Edward Wong wrote in the New York Times:“China’s “policies have lifted millions from poverty, but have resulted in an uneven distribution of wealth, which was one of the glaring problems of early 20th-century China and contributed to the success of the Communist revolution. Ordinary Chinese are increasingly resentful of wealth being accumulated by a select few — and in particular by people connected to party officials. <^> <^>

The market-based liberalization initiated Deng Xiaoping from the late 1970s after decades of rule by Mao Zedong has boosted incomes and GDP but also starkly widened income disparities. China is producing more millionaires than any other emerging economy, according to a 2013 Asia-Pacific Wealth Report from Capgemini and RBC Wealth Management. It counted 643,000 dollar millionaires in 2013, up 14.3 percent from 2012. At the same time hundreds of millions remain mired in rual poverty.

China’s system is changing very fast and “those who can take advantage of the system will get rich very quickly,” Ding Shuang, senior China economist at Citigroup Inc. in Hong Kong told Bloomberg. “This is very common in any developing country when the societies are not mature and the system is not set up to be fair to everyone.” In contrast, the pressure on the poorest is smaller in the U.S., where better social safety nets would help to reduce social instability, he said. Ding used to work for China’s central bank. [Source: Lorraine Woellert and Sharon Chen, Bloomberg, April 29, 2014 \=\]

Impact of Income Inequality in China

“If the disparity continues to increase, that is not only bad politically -- it will definitely affect social stability, but is also bad for the economy,”Ding Shuang, senior China economist at Citigroup Inc. in Hong Kong told Bloomberg. “People are increasingly aware of their rights,” including migrant workers and farmers, he said. [Source: Lorraine Woellert and Sharon Chen, Bloomberg, April 29, 2014 \=\]

Recently, factory strikes and violent attacks have highlighted growing social unrest. “It’s not clear at this point how big of an issue inequality is to the average Chinese peasant or factory worker,” said Glenn Levine, an economist at Moody’s Analytics in Sydney. “At the moment the main gripe of the broader population appears to be around corruption of the elites” and the environment, he said.

Cong Yaping and Li Changjiu, economic analysts with Xinhua's Center of World Studies, warned that China's Gini Coefficient - an indicator of income inequality - has exceeded 0.5, threatening poor economic security, a weaker development outlook and social instability, the Xinhua-owned Economic Information Daily newspaper reported. The warning threshold, as commonly recognized by the international community, of the Gini Coefficient is 0.4. A World Bank report said the index for China surged to 0.47 last year.[Source: Global Times, Guo Qiang, May 27, 2010]

China’s income inequality, as measured by the Gini coefficient, is now on a par with some Latin American and African countries, according to the World Bank, with 0.5 deemed by some to be conducive to social disturbances. In 2010 Justin Yifu Lin, the bank’s chief economist, identified the growing disparity as one of China’s biggest economic problems. [Source: Sharon Lafraniere, New York Times, April 22, 2011]

Yang Yiyong, director of the Social Development Research Department at the NDRC, warned that China can't afford any further rises in the Gini Index, as growing disparity could result in social unrest and “could even cause distrust in the country's public-ownership economic system.” ‘social problems, including migrant workers consecutively taking their lives and serial attacks on schoolchildren, are related to conflicts stemming from the income gap,” Yang said. Yang's words referred to seven unrelated attacks on primary school and kindergarten students in less than two months in 2010, in which more than a dozen children were killed. [Ibid]

China’s Richest One Percent Own a Third of China’s Wealth

In China one percent of the population controls one-third of the wealth according to a study by Peking University’s Social Science Research Center released in July 2014. Most of the wealth is tied up in real estate. In 2012, the study says, real estate accounted for 70 percent of all household wealth in China. The bottom quarter of households by contrast control just one percent of China’s wealth. [Source: Christina Larson, Bloomberg, July 28, 2013]

Edward Wong wrote in the New York Times: The survey showed that more than 87 percent of Chinese families owned or partially owned property in 2012, and more than one-tenth of Chinese families have more than one property. The Chinese government has recently enacted policies to try to discourage the purchases of second properties for speculation, to try to slow down the sharp rise of real estate prices in urban areas.The average size of property for a Chinese family was 100 square meters, the survey said. [Source: New York Times, July 19, 2013 <^>]

Christina Larson of Bloomberg wrote: “But how do China’s rich stack up against America’s? The U.S. Internal Revenue Service analyzes income, not household net wealth, and in 2012, America’s richest 1 percent took home 19.3 percent of household income. But incomes rose almost 20 percent for the top 1 percent, whereas they inched up just 1 percent for the bottom 99 percent. [Source: Christina Larson, Bloomberg, July 28, 2014 ***]

“Economists Emmanuel Saez of the University of California at Berkeley and Gabriel Zucman of the London School of Economics estimated the distribution of household wealth in the U.S. They calculated “how much property different strata of society owned by looking at the income that was generated by that property,” as my colleague Peter Coy reported. The richest 1 percent of Americans, they found, control 40 percent of the country’s wealth, and the top 0.1 percent control more than a fifth—which would mean wealth in the U.S. is still more concentrated than in China. ***

Income Gap Between Urban and Rural China

The rural-urban income gap constituted a major part in the overall gap. The People's Daily reported that the existing hukou system has helped push up the gap between the rich and poor. Citizens with rural hukou cannot generally enjoy the same social benefits as urban residents, even though they live and work in cities. [Source: Sharon Lafraniere, New York Times, April 22, 2011]

For every one yuan of a rural resident's income, a city-dweller enjoys 3.23 yuan in disposable income---and that may significantly understate the gap. Include the extra services and benefits enjoyed by urbanites, such as subsidised housing, and "many observers believe that the ratio would easily be in the range of four to five and is arguably among the highest in the world," says professor Kam Wing Chan, an expert on migrants at the University of Washington. "China's incomes are increasingly polarised. This large income gap is definitely a contributor in the background to the more frequent and violent protests and unrest." [Source: Tania Branigan, The Guardian, October 2, 2011]

Even farmers who reach the cities as migrant workers are in effect second-class citizens, because China's hukou---household registration---system classifies people as urban or rural and allocates rights to services accordingly. One Chinese academic has described the result as "counterfeit urbanisation": cities full of people who cannot enjoy much of city life.

In recent years, Chinese leaders have sought to give rural areas more help. Official statistics suggest the income gap may have closed slightly within the last year, though experts suspect this reflects sampling changes.

Income Gap in Shanghai

Will Clem wrote in the South China Morning Post,’shanghai - and the Yangtze River Delta that surrounds it - is awash with cash. It's visible in the shiny new BMWs, Jaguars and Lamborghinis that cruise along the city's elevated highways. It's seen in the spectacularly overpriced designer handbags chic young mistresses use to batter their way through crowded pedestrian areas. And it blares out from the stylishly exclusive nightclubs flowing with rivers of champagne and Johnnie Walker Blue mixed with green tea. [Source: Will Clem, South China Morning Post June 25, 2011]

But it goes without saying that not everyone is on the sweet end of the deal. Those trendy nightspots are nightly laid siege by platoons of penniless beggars. Supercars come to a rest at red lights alongside rusting tricycles piled with recyclables rescued from the litter bin. The reality is that most of Shanghai's 23 million residents scrape by on a minimal amount of money, and none more so than newly arrived migrants.

According to the municipal statistics bureau, the average annual wage in 2009 - the most recent figure available - was 42,789 yuan. That's well above the national average but it doesn't go very far in a Gucci store. It is the in-your-face brashness of the nouveaux riches in the mainland's most glamorous city that is a constant reminder to the rest of the population just how meagre their own lot is.

Income Gap and Tensions in Beijing

Leo Lewis wrote in The Times, “When the Zhongguo Zun tower is completed in 2015, it will soar 500 meters above the heart of Beijing as the city's tallest building; a glittering testimony to a nation in the throes of a dirty, destructive affair with capitalism. At its feet are some of the busiest showrooms on earth, selling Ferraris and Maseratis to entrepreneurs, mostly 15 years younger than the average luxury car owner in the West. The surrounding hotels host wedding receptions about 400,000 percent more expensive than even the classiest Beijingers paid before the economy began booming. [Source: Leo Lewis, The Times, September 30, 2011 ^/^]

“All of this will proceed unrepentantly beneath the weary gaze of the "other" Beijing, a city choked by pollution and described by the dissident artist Ai Weiwei as a "constant nightmare" of violence, numbing abusiveness and fear. A paranoid government, and even some outside observers, may characterise Beijing as being "on the edge" and unable to contain the tensions and furies of wildly uneven growth. Mr Ai's assessment sees a permanent underclass too glazed by defeat to protest. ^/^

“These other Beijingers, wrote the artist recently, are the city's slaves; the migrants stripped almost completely of rights, protection and hope. Like all of the city's monuments to wealth, Zhongguo Zun will be built by migrant workers who will never shop in its stores, never buy stocks through the brokerage upstairs and will never participate in the legitimate life of Beijing. "The 'two cities' image can be employed for any big city in the world," said Hu Xingdou, professor of economics at the Beijing Institute of Technology. "But it is particularly applicable in Beijing,” he said. “In other capital cities, the rich are not so flaunty and ostentatious, and the poor do not have absolutely nothing at all. Privilege is not as rampant as in China and nowhere else are the vulnerable groups so very weak." ^/^

“In fact, say analysts, the "two cities" concept disguises the dozens of faultlines splitting Chinese society. The rich-poor divide is merely the financial expression of a rift between the powerful and the powerless; between those who can work the system and those it so openly exploits. The destitution at the bottom of Beijing society, say other Chinese academics, is tantamount to a genetic disease: the strict rules of "hukou" permits that prevent migrants gaining true residency of China's cities will condemn their children to unstable schooling now and limited prospects as they grow up. ^/^

“One of the fundamental problems, said Professor Hu, was that while Beijing had successfully coaxed the economy from basket case to behemoth, it failed to generate a coherent "China Dream"; a belief in the fundamental rightness of the system. For all the party rhetoric, there is nothing that has convinced poor Chinese of any likely improvement of their lot. "This is a fast developing and fast-changing country, so theoretically there should be a China Dream. But the solidification of class and regulations mean that the space for improvement at the bottom is far too narrow for that dream to thrive," said Professor Hu. "The children of the poor are poor forever. Compared to the American Dream, the China Dream is far inferior and far less colourful. All people can do is accept reality and never know what forces have stopped them getting rich." ^/^

Contempt (Envy) for People with Expensive Cars in China

Mark McDonald wrote in the New York Times, “There is special contempt---and some envy, of course---for black Audi A6's, Ferarris and Bentleys. Expensive cars serve as symbols of the so-called Great Divide, the widening wealth gap between China’s 1 percenters and everybody else. A recent poll by Renmin University showed that only 5.3 percent of respondents believe the rich come by their wealth legally. The survey was cited in a story in the People’s Daily newspaper about a 24-year-old unemployed man who smashed the windows of two Mercedes-Benzes. “Why can some people drive such good cars,” the man said in court, “and I have to wander on the streets?” [Source:Mark McDonald, New York Times, March 20, 2012]

It was a tragic car accident in October 2010 that gave rise to a notorious addition to China’s sociopolitical vocabulary---the phrase, “My father is Li Gang!” My colleague in the Beijing bureau, Michael Wines, reported about that accident, when a Volkswagen smashed into a college student, a poor farm girl, who later died. Michael wrote: “The 22-year-old driver, who was intoxicated, tried to speed away. Security guards intercepted him, but he was undeterred. He warned them, “My father is Li Gang!”

Li Qiming, the driver, was the son of Li Gang, a deputy police chief, and propaganda officials quickly threw a cloak of silence over the media, as Michael wrote, “to ensure that the story never gained traction.” Quite the opposite happened, however, and the phrase “My father is Li Gang” has become a notorious and bitter catchphrase for shirking responsibility. The author and journalist James Fallows, in his blog “In short,” Mr. Fallows writes, “every exposed raw nerve created by the gaping economic and power inequalities of today’s China was touched by this episode.” [Ibid]

“In April 2012, Mei Fong wrote in the Los Angeles Times, After USC graduate students Ming Qu and Ying Wu were shot and killed earlier this month, the Chinese student community in America was saddened, shocked and frightened. The reaction back home was very different. The killings, which happened while Qu and Wu were sitting and talking in a BMW, unleashed a torrent of Internet vitriol in China, and it wasn't directed at the pair's attacker. A comment on the popular site 163.com was typical: "Studying in America, driving BMW, a male and a female, let them die." Another commenter on 163.com posted this: "We should think about why a lot of families, even the poor ones, spend a lot to send their children abroad. This is meaningless. Studying abroad only contributes to American GDP. Stop cheating us." [Source: Mei Fong, Los Angeles Times, April 26, 2012]

“Never mind that the BMW was a secondhand model and not the $60,000 luxury model the Associated Press erroneously reported initially. Or that Qu and Wu were not especially rich or well connected: Qu's father is a manager at an insurance company, his mother a teacher. Wu's father is a police investigator and her mother a retired textile worker. The malevolence this tragedy generated grows out of deep divisions within China. The chasm between haves and have-nots is growing ever wider, and with it has come resentment that extends to the approximately 160,000 students a year---enough to populate three schools the size of UCLA---who elect to study in the United States. [Ibid]

Contempt for BMW-Driving Chinese Students Murdered in Los Angeles

In April 2012, Mei Fong wrote in the Los Angeles Times, After USC graduate students Ming Qu and Ying Wu were shot and killed earlier this month, the Chinese student community in America was saddened, shocked and frightened. The reaction back home was very different. The killings, which happened while Qu and Wu were sitting and talking in a BMW, unleashed a torrent of Internet vitriol in China, and it wasn't directed at the pair's attacker. A comment on the popular site 163.com was typical: "Studying in America, driving BMW, a male and a female, let them die." Another commenter on 163.com posted this: "We should think about why a lot of families, even the poor ones, spend a lot to send their children abroad. This is meaningless. Studying abroad only contributes to American GDP. Stop cheating us." [Source: Mei Fong, Los Angeles Times, April 26, 2012]

“Never mind that the BMW was a secondhand model and not the $60,000 luxury model the Associated Press erroneously reported initially. Or that Qu and Wu were not especially rich or well connected: Qu's father is a manager at an insurance company, his mother a teacher. Wu's father is a police investigator and her mother a retired textile worker. The malevolence this tragedy generated grows out of deep divisions within China. The chasm between haves and have-nots is growing ever wider, and with it has come resentment that extends to the approximately 160,000 students a year---enough to populate three schools the size of UCLA---who elect to study in the United States. [Ibid]

“Disdain for American-educated students has come only recently. During China's economic expansion in the 1980s, students educated abroad were feted and valued for the skills and knowledge they acquired, which were then scarce in China. The students were dubbed hai gui, or "sea turtles," as opposed to "land tortoises," the term for those who stayed home to get their education. [Ibid]

“Even as many Americans make the mistake of viewing China as a monolithic superpower, the Chinese, too, tend toward one-sided views of America. America the imperialist oppressor; America the violent. It's a view that Qu's and Wu's tragedy unfortunately reinforces. But there is also another dimension to the Chinese view of America. It is a country many admire as a place of hope and possibilities and opportunity, the land that created Steve Jobs and Jeremy Lin. This is the America that draws ever-growing numbers of Chinese students, who then take home a view of the United States that refutes the stereotypes. Such an exercise of informal diplomacy on a grand scale cannot help but change U.S.-China relations. It may even change the world. [Ibid]

Riots in Left Out Regions in China

In the poor province where peasants have been left out of the economic miracle there have been riots and social unrest. In the Guizhou Province, workers who were not paid for working on a road rioted. The province's Communist newspaper reported "illegal elements openly smashed vehicles, illegally took hostages and robbed public security cadres and police of their firearms, thus causing serious consequences."

Historically rural poverty has been one of the main causes of political unrest. In the mid 1990s, tens of thousands of peasants rioted in the cities of Kaili and Tingren in Guizhou Province over punishing taxes, harsh birth control policies and the high cost of feeding and educating their family. The army had to be called to restore order.

See Demonstrations, Taxes, Government; Land Seizures, Agriculture, Economics.

Efforts to Close China’s Income Gap

“China’s long-term solutions to the divide include more market reforms, stronger social security programs, lower taxes on low-income families and tighter controls on illicit income,” Sharon Lafraniere wrote in the New York Times.---But while waiting for Beijing for all that, some local officials are looking for ways to gloss over the gap. A regulation posted in March 2011 on the Web site of the Beijing Administration for Industry and Commerce banned outdoor advertisements promoting “unhealthy” tendencies, including “hedonism, feudalism and royalty, worshiping of and groveling before foreign things, supreme aristocracy and vulgar tastes.”

At the National People's Congress in March 2011, Chinese Premier Wen Jiabao pledged to place the country's have-nots at the heart of its development goals for the next five years. In his address at the opening of the congress Wen promised to ensure social stability by curbing inflation and raise the incomes of those left behind by China’s spectacular growth. "We must make improving the people's lives a pivot linking reform, development and stability," said Jiabao, in his annual work report. "And make sure people are content with their lives and jobs, society is tranquil and orderly and the country enjoys long-term peace and stability." [Source: Tania Branigan, The Guardian, March 5, 2011]

In March 2010, Wen promised increased spending on welfare and rural areas, aiming to halt the growth of the gap between rich and poor, maintain stability and spur domestic demand. In the speech before the National People's Congress (NPC), China's rubber-stamp parliament, Wen warned: “We must not interpret the economic turnaround as a fundamental improvement in the economic situation...There are insufficient internal drivers of economic growth." Wen Jiabao promised to ease rules denying public welfare services to millions of migrant workers and do more to met the social security need of China’s poor. He pledged to reform the increasing unpopular household registration , or hukou , system under which a citizen’s residency is strictly tied to one’s hometown. [Sources: AFP, Tania Braniganm The Guardian, March 5, 2010]

Making the case for increased social spending, as he has done in recent years, he added: “We can ensure that there is sustained impetus for economic development, a solid foundation for social progress, and lasting stability for the country only by working hard to ensure and improve people's well-being...We will not only make the pie of social wealth bigger by developing the economy, but also distribute it well.” In an online chat he said that a society was “doomed to instability” if wealth was concentrated in the hands of a few. [Ibid]

Wen also pledged reform of the hukou (household registration) system, which means that tens of millions of migrant workers do not enjoy the same rights to basic services as urban dwellers. But critics say the pace and scale of government changes are inadequate to ensure that China's rural and urban citizens are treated equally. [Ibid]

Around the same time the Global Times reported: ‘stepped-up efforts to reform the way China spreads out its wealth are being reviewed amid warnings and fears that a widening income gap is jeopardizing social stability across the country. A plan to curb the yawning wealth distribution will be drafted, according to officials with the National Development and Reform Commission (NDRC)... Such a plan could be written into the country's next Five- Year Plan for 2011-15.” [Source: Global Times, Guo Qiang, May 27, 2010] State media outlets have featured intensive coverage on the issue, with one report appearing in the overseas edition of People's Daily commenting that China is faced with a growing income gap and an accompanying sense of social inequality despite a steady growth since the 1980s in the national average salary. [Source: Global Times, Guo Qiang, May 27, 2010]

Yang Yiyong, director of the Social Development Research Department at the NDRC, says one solution to the problem is allowing the free mobilization of labor and the implementation of equal pay for equal work, both of which are hindered by the current household registration system, or hukou. [Ibid}

Li Keqiang, who is expected to become premier next year, has suggested urbanisation could "pull up" the countryside as a smaller number of farmers consolidate land, leading to increased productivity---though much farmland is being lost to development. Yet the best prospect for most farmers remains a move to the cities. There are promising pilot projects that attempt to tackle the urban-rural gulf: improving education for poorer children; increasing integration.Cities such as Chongqing and Guangdong have been experimenting with limited hukou reform. [Source: Tania Branigan, The Guardian, October 2, 2011]

China’s Proposal to Narrow Income Gap

In February 2013, Chris Buckley wrote in the New York Times, “The Chinese government issued a long-awaited plan to narrow the gulf between rich and poor, offering broad vows to lift the incomes of workers and farmers and choke off corrupt wealth but few specific goals to rein in the nation’s wide inequality. The proposal was mired for months in an internal dispute about whether to aggressively scale back the rising salaries and benefits of some officials working for state-owned businesses and banks. The document that emerged from the discussions is filled with commitments to deal with that issue and other sources of public concern about the gap between the incomes of residents of dirt-poor villages and those living in privileged urban enclaves. [Source: Chris Buckley, New York Times, February 5, 2013 ^^]

“There are some stark problems in income distribution that need urgent solving,” said the plan, which was issued on the central government’s Web site. “Chiefly, there remain quite large disparities in urban-rural development and incomes, income allocation is poorly ordered, and there are quite serious problems with invisible and unlawful sources of income.” The plan was drafted by the National Development and Reform Commission and other central agencies. “The income distribution plan was an initiative promised by the departing Chinese prime minister, Wen Jiabao. But it also underscores the extent to which the new generation of leaders under Xi Jinping has promised to expand state spending on health care, education and social welfare. ^^

“The income plan, however, does not offer specific new initiatives to reduce corruption. Beyond a general commitment to eliminate sources of illegal income, the plan says that officials must abide by already announced rules to report earnings and assets to superiors. Many experts, however, have said such rules are ineffective without public disclosure as well. The new plan also says that by the end of 2015 state-owned corporations under central administration should increase the returns they pay the government by five percentage points, with the additional payments to be used for social welfare. “Deepening reform of the income distribution system is an extremely arduous and complex task of systemic engineering,” the new plan says. “It cannot be achieved in one step.” ^^

Image Sources: Bucklin archiveshttp://www.bucklinchinaarchive.com/ ; Liu Bolin, China’s Invisible Man artist, Global Times Chinese: photo.huanqiu.com http://photo.huanqiu.com/creativity/unlimited/2010-11/1254288.html ; YouTube

Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, Lonely Planet Guides, Library of Congress, Chinese government, Compton’s Encyclopedia, The Guardian, National Geographic, Smithsonian magazine, The New Yorker, Time, Newsweek, Reuters, AP, AFP, Wall Street Journal, The Atlantic Monthly, The Economist, Foreign Policy, Wikipedia, BBC, CNN, and various books, websites and other publications.

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© 2008 Jeffrey Hays

Last updated July 2015

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