I’m heading into my work week and don’t have all that much time to post (how did Richard do this again??). But here’s a piece that caught both my and Martyn’s eye, and here are our thoughts…
Following last week’s WHO-sponsored report into the failure of China’s healthcare system, this week sees yet another damning report, commissioned by the Labor and Social Services Ministry, made public. This time, the subject matter is the mainland’s rapidly widening income gap, and it warns that, if the government finds no effective solutions to end the worsening disparity of income, then China’s increasingly unequal society will almost certainly trigger social instability:
Chinese scholars have warned that rising income disparities — especially between the nation’s booming cities and vast, impoverished countryside — will likely undermine social stability by the end of the decade, the official China Daily newspaper reported Monday.
Annual urban incomes that are due to surpass 10,000 yuan ($1,200) on average are growing twice as fast as those in the countryside, the China Daily said, citing a report commissioned by the Labor and Social Services Ministry.
Rural incomes linger at around 3,000 yuan ($370) per year.
The income gap between rich and poor in the countryside is also widening, along with that between laid-off factory workers and the new urban upper class, the report said.
“Income disparity in China is in the yellow light area now,” the paper said, citing a report by the team of scholars, headed by Su Hainan, president of the ministry’s Income Research Institute.
“We are going to hit the red light scenario after 2010 if there are no effective solutions in the next few years,” it said. The team uses blue, green, yellow and red light indicators to track income disparity trends, with red being most serious.
In 2003, President Hu Jintao, in an abrupt change of tack from the previous president Jiang Zemin, came to power claiming to be man of the people, representing the poor and the dispossessed, China’s “have-nots” if you like. The President trumpeted the eradication of poverty as one of his government’s top priorities. However, despite a series of government measures to raise the income of the poor, the nation’s income gap has continued to expand at a frightening clip:
The wealth gap is most serious in rural China, where average farmers earn 3.39 times as much as those listed as the lowest earners. That disparity was just 2.45 in 1992, the report said. The government said earlier this year that income gaps were expected to continue widening over the next decade.
China’s richest 10 percent had disposable incomes 11.8 times greater than those of the poorest 10 percent, according to the earlier report. Disposable income is salary minus government levies and taxes. China’s wealthiest 10 percent held 45 percent of the country’s wealth while the poorest 10 percent held just 1.4 percent by the end of the first quarter of 2005, the earlier report said.
Neither report speculated on what form social instability could take, but China has been hit by a series of violent protests by farmers angry over environmental degradation and land seizures. Conflicts over scarcities of water and other basic resources are also spreading and experts warn China has only a few years left to prevent a worsening AIDS crisis from turning into a full-blown national epidemic.
We’d bet good money that Hu/Wen backed the release of these reports, providing as they do further ammunition for the need for greater “social harmony.” These are public acknowledgments of very real problems in today’s China, and a sign of just how severe China’s current leadership considers these problems to be.
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By Martyn
I’d particularly welcome commenter dylans opinion here as he usually has his finger on the pulse of the CCP.
In this case, as per the public release of the WHO-sponsored healthcare report, I feel that Hu Jintao is making this govt report public in order to shame the rest of the party–nationwide–into attaching further emphasis to the appaulling income gap in China.
Even 5 years ago, things weren’t as bad as this. Official govt figures for protests recorded in 2004 up to 74,000 is, I feel, just the tip of the iceberg. Therefore, it’s heartening to see the govt predicting a doomsday scenario within the coming few years UNLESS something can be done now to allieviate the gap between China’s “haves” and “have nots”.
Still, it’s action I want to see, not words. Whether the govt can actually do something positive about this problem remains the US$64,000 question.
August 23, 2005 @ 2:56 am | Comment
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By TM Lutas
The normal result of this sort of disparity the world over is an emptying out of the countryside, creating shortages of rural labor, driving up prices on food and whatever rural goods the cities need. I refuse to believe that only chinese peasants are too stupid to move to where the money is.
Something’s stopping them from equalizing wages. Remove that (likely legal) impediment and the social instability problem caused by wage differential goes away. The poor rural producers are the most likely movers. Why would they stay?
It’s quite possible that the PRC system for absorbing new people into urban areas is not well developed enough so that increasing urban/rural income disparity is the best of a set of increasingly bad choices. This makes the report myopic and less than useful. Interlocking problems cannot be constructively addressed in isolation.
August 23, 2005 @ 11:02 am | Comment
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By dylan
Sigh. The facts and projections in this report are in fact not new (the publicity in the Western media is though). Hu and his crowd have been trying to publicise them at least since 2001. For instance, on 19 July last year China Youth Daily ran an article entitled “China becoming a society at Risk: Crisis Management Systems Cannot Keep Pace with Outbreak of Crises” which rehearsed many of the same themes quoting liberally from CASS professors (for the uninitiated, CASS has been a stronghold of the Hu camp for some time). On 10 June CYD had run a long commentary “The feeling of relative exploitation is fermenting” discussing how a rising tide was not lifting all boats equally and dissatisfaction was growing. Back in 2002 there was the famous Strategy & Management article by Hu Angang, Ding Yuanzhu et al entitled “Sounding the alarm: The social crisis behind the prosperity” which is the basic text for anyone wanting to understand the Hu camp’s indictment of robber baron capitalism in the 1990s and its impact on society. On 9 September last year, the SCMP ran an article (“Academics warn that social unrest could pose threat to the economy”) highlighting the CASS report that has been rehashed this year predicting doom by 2010. On 15 September 2004 Ching Cheong (yes, that Ching Cheong) wrote an article in the Straits Times about how the CPC was trying to avert its downfall in the face of massive dissatisfaction and unrest.
TM Lutas – I don’t know how much you know about China, but the sad fact is that there is no unified labour market becuase people are not free to become permanent residents wherever they please. Rather a system of residency permits and exclusions from social services and rights operates to systematically disadvantage those born in rural communities. That is why farmers working in urban areas are referred to as a floating population – they have no rights to permanent residence in the city. This is no accident. Urban Chinese fear few things more than an “invasion” of “rude peasants” seeking jobs, housing, social services, and political power.
August 23, 2005 @ 9:36 pm | Comment
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By dylan
Sorry, I should add to my comment about the hukou system, that it is one of the main policy planks of the Hu/Wen agenda to remove the barriers to rural/urban migration, but it is one of the key objectives of the Shanghai gang to maintain them.
All told we are witnessing a titanic struggle for the future of China and its economic course, although few seem to realise it.
August 23, 2005 @ 9:40 pm | Comment
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By Other Lisa
Dylan, thanks as always for sharing your perspective and knowledge with us.
August 24, 2005 @ 1:20 pm | Comment