China's growing gap between rich and poor

Writing from Guangzhou, Reuters' John Ruwitch  reports that China's wealth gap is reaching critical level:

Fancy imported cars, five star hotels and slick malls dot Guangzhou, the hub of a region that has blossomed into one of China's - and the world's - main economic engines.

...Persistent poverty in China's countryside, against the backdrop of fast growing cities, has sparked social unrest in some spots and elicited sympathy from the wider populace.

The public was outraged in 2003 when a driver in northeastern China ran over and killed a peasant with her BMW, but was given a light sentence.

The leadership in Beijing is deeply concerned there could be a wider backlash, threatening a decade of strong economic growth and the Communist Party's grip on power, says Wenran Jiang, a China expert at the University of Alberta.

"They have come to the conclusion that ... the regime will not survive if they don't address the growing wealth gap, and more importantly, the perception that the government only cares about economic growth and the urban rich," he said.

Deng Xiaoping espoused a trickle-down approach, saying: "Let some people get rich first".

Some have become gloriously rich. Next week, the Hurun Report, which tracks China's wealthy, will issue its 7th annual China Rich List on which the average wealth for the richest top 400 is about $200 million. Seven are billionaires.

To be sure, tens of millions of people have been lifted out of abject poverty since the Party came to power 56 years ago. But the wealthiest 10 percent of China's urban households now own 45 percent of the urban wealth while the poorest 10 percent have less than 1.4 percent, Chinese statistics show.

That has left Deng's successors, President Hu Jintao and Premier Wen Jiabao, grappling with a wealth differential that economists say is wider than when the Communist Party came to power in a 1949 revolution. Average urban incomes last year were 9,400 yuan ($1,164) while rural income was 3,000 yuan ($372).

The Reuters story then cites the recent Central Party School newspaper report, warning that "social contradictions" are on the rise (see my previous post China wants less inequality, more 'social fairness and democracy' for more details). How has Beijing responded?

Beijing has taken steps to try to buoy rural incomes, allowing grain prices to rise and starting direct farm subsidies. It has also scrapped the agriculture tax, a centuries-old Chinese institution, and tried to abolish an array of crippling local fees.

But some of the measures, while lightening the burden on farmers, have bankrupted local governments, which are forced to raise cash elsewhere. The once robust Communist social safety net has vanished, and rural dwellers now pay for things like education and health care.

"In poor areas, there are a lot of conflicts between the government and the farmers," said Li Fan, director of the World and China Institute, a private thinktank in Beijing.

China's "Gini coefficient", a measure of inequality used by economists that runs on a scale from zero to one, is believed to be above 0.45, among the highest in the world. The closer to one, the greater the inequality, and the prospect for unrest. "That means it's already a critical time," said Li.

To escape poverty, country dwellers keep pouring off trains in cities like Guangzhou and the nearby border boomtown of Shenzhen:

...Liu Zhengde begs for change outside a candy store in a lively shopping district. Originally from the Henan province in China's heartland, Liu has drifted for much of his life. He has never married, and his last job was selling fruit in the central city of Wuhan.

That venture failed a few months ago, leaving the equivalent of less than 6 U.S. cents in the pocket of the weathered man with a wiry beard and wide eyes who, asked his age, says: "over 80".

"I couldn't even afford a steamed bun. Those cost five mao. All I had was four," he said. "Everybody said go to Guangdong."

The economic boom has made Guangdong one of the wealthiest places in China. But opportunity has been elusive for Liu who sleeps under bridges. "All I want is enough money to buy a train ticket back home."

Comments

[Mr. King]

Do we need a Referendum For A New Democracy?

Are you concerned about the future of democracy? Do you feel democracy is under attack by extreme greed in countries around the world? Are you sick and tired of: living in fear, corporate greed, growing police state, government for the rich, working more but having less?

Can we use both elections and random selection (in the way we select government officials) to rid democracy of undue influence by extreme wealth and wealth-dominated mass media campaigns?

The world's first democracy (Athenian democracy, 600 B.C.) used both elections and random selection. Even Aristotle (the cofounder of Western thought) promoted the use random selection as the best way to protect democracy. The idea of randomly selecting (after screening) juries remains from Athenian democracy, but not randomly selecting (after screening) government officials. Why is it used only for individual justice and not also for social justice? Who wins from that? ...the extremely wealthy?

What is the best way to combine elections and random selection to protect democracy in today's world? Can we use elections as the way to screen candidates, and random selection as the way to do the final selection? Who wins from that? ...the people?

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