Inequality in China

30 Apr

Since China’s economic and social reforms that have occurred from 1978 onwards, and have allowed China to a more market-based economy, the Nation has been recognised for its achievements in reducing the level of absolute poverty within its borders. If the Chinese Government’s official statistics are to be used, a rapid decline from 30% of the rural population in 1978, to just 5% of the rural population by the end of 1998, were considered to be living in poverty.

However, internationally recognised statistics, such as those provided by the World Bank, show a different story. Although there is evidence of decline in absolute poverty, the World Bank estimated the percentage of rural persons living in poverty was closer to 11.5% than the state statistics of 5% (11.5% represents approximately 106 million people). And in 2001 it was argued that 1 in 5 of the world’s total poor lived within China. Income inequalities between Western and Eastern regions within China have grown dramatically, whilst simultaneously there has been a sharp increase in the income gap between those living in rural areas, and those living in the urban centres. It is estimated that urban incomes are as high as three times that of rural incomes, thus showing the extreme income gap and inequalities between rural and urban persons. In 2010 the rural income per capita average stood at 5,900 yuan ($898), whilst the capita disposable income of urban residents stood at 19,100 yuan ($2,900).

In 2010, China’s Gini co-efficient stood at 0.47 (a value of 0 suggests complete or total equality, whilst a value of 1 suggests complete or total inequality). This figure shows that, in terms of inequality, China has now surpassed the US (a society considered to be highly unequal based on ethnic and class determinants) as a highly unequal society. A figure of 0.4 is considered to be a warning sign of massive inequality to the international community, and the rise of inequality shown within the Gini co-efficient Index throughout the 2000’s has sparked international concern. 

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The table above shows the level of ownership of commodities and technologies per 100 households, and shows that households living in rural areas are significantly less likely to be able to afford commodities such as computers and refrigerators, and are more likely to use unsafe and unhealthy modes of transport such as motorcycles. Although such measures cannot demonstrate the levels of persons living in absolute poverty, or provide accurate and generalizable statistics, they can provide a powerful image about the levels of social inequality found between rural and urban households.

China’s previous government attempted to begin strong measures to correct this trend by increasing investment in rural areas, especially in infrastructure, irrigation, education and health. In November 2011 the government redefined the level at which people living rural areas are categorised as ‘poor’. Previous to this move, people in rural areas had only been defined as ‘poor’ if they were living on below 55 cents a day; however following November 2011 persons living on a $1 or less a day are now officially considered and recognised as poor. This measurement of poverty whereby persons are defined as ‘poor’ when they live of $1 a day is an internationally recognised measure of poverty and therefore allows statistics within China to be internationally comparable. The hope was that this re-definition would allow for hundreds of thousands of Chinese people to access welfare and other state benefits such as subsidies, job training, employment opportunities, discounted loans and the promise of government funded rural infrastructure programs. Previous Chinese President Hu Jintao stated he wanted to create a ‘harmonious society’ within China, and to achieve this Mr Hu established a number of large-scale development projects into some of China’s most poverty stricken rural districts. In November 2011 Mr Hu announced by 2020 no persons within China would have the need to worry about food or clothing, and that rural access to education, housing and basic medical will be ensured for all. The trend discussed here, of the widening gap between the rich and the poor, the urban and the rural, was considered a priority of Mr Hu and trend that must be reversed.

16 months later, at the opening of the National People’s Congress in March 2013, where the current president Xi Jinping took over from Hu Jintao, the report produced by Mr Wen (whose work report traditionally begins the new session of parliament) focused upon the increased wellbeing of Chinese citizens. The social issues that have arisen from the vast economic development seen within China were acknowledged within the report, and sustainable economic development was placed as a focal point for the strategy of the new leadership. However despite the optimistic messages of increased well-being, the focal point is still economic development. China under Xi Jinping will continue to pursue rapid economic growth, it will continue to build its giant cities and continue to shift tens of millions of persons from the countryside to the towns and therefore, somewhat overlooking the major social and environmental issues such strategies have posed for China thus far.

The authority of the Chinese government is increasingly questioned in the eyes of many Chinese citizens, and without focussing on the severe social inequality that has arisen from the rapid economic growth, urbanisation and economic reforms, the voice of the rural (which is China still contributes a majority share of the population) may become more negative, thus further undermining the Nationalist Party rule. The challenge for Xi Jinping will be to ensure the growth of Chinese economy, whilst at the same time ensuring the levels of current social and environmental issues are addressed and improved. The question is, with a continued focus on the urbanisation of China by the government and the continuous opening up of the Chinese Market, how realistically can this be done? One could argue that unless China moves away from its current attitude of growth, growth, growth the inequality faced by millions of it citizens will continue to be a secondary, and somewhat hind sighted concern for its government.

 

Sources:

Chen, S., and Ravallion, M., (2004) “How have the world’s poorest fared since the early 1980s?” The World Bank Economic Observer, 19(2), 141–169.

China increase rural poverty limit to $1 a day – http://www.bbc.co.uk/news/world-asia-china-15956299

Inequality in China: Rural poverty persists as urban wealth balloons – http://www.bbc.co.uk/news/business-13945072

Rural Poverty in China – http://www.ruralpovertyportal.org/country/home/tags/china

Wen Jiabao ‘well-being’ vow as China parliament opens- http://www.bbc.co.uk/news/world-asia-china-21652640

What does the future hold for China? – http://www.bbc.co.uk/news/world-asia-china-21666152

Zhang, Y., and Wan, G., (2006) The Impacts of growth and inequality on rural poverty in China – http://www.econstor.eu/bitstream/10419/63309/1/517989778.pdf

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One Response to “Inequality in China”

  1. kh13g11 May 1, 2013 at 9:06 am #

    What poor means in China

    Even though they have a high GINI index, due to the closed nature of the Chinese social and political system there is very low level of knowledge as to what it actually means to be poor in China. The inflation that has also hit China means that like many other unequal societies including the US the amount of produce that 6.3 Yuan would have bought you 5 years ago is more than the same amount of money can buy you now.
    The extreme poor in China are uneducated and lack the security of food and shelter. In a study conducted to look into the best ways to help reduce the inequality, government expenditure on education was seen as the greatest influence. This was so influential as with grater education there is a greater knowledge of how things work and will occur meaning that there will also be production growth, leading to lower levels of unemployment and by extension a reduction in the levels of inequality.
    Due to the large and in some ways unsustainable size of the population the investment that the government has spent on the research and development of agricultural practices should help to increase production further and then help to cope with the large population size. This will only be of help though if those at their poorest have access to the new technologies and practices, otherwise it will only serve to further widen the inequality gap.

    http://www.economist.com/blogs/analects/2013/02/chinas-poor
    Fan S, Zhang L, Zhang X.(2002) Growth Inequality and Poverty in Rural China, The role of public investments. The international policy research institute, Washington.

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