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China's New Wealth Distribution Map

One China – Four Worlds


One China – Four Worlds


Workers leaping off buildings, murderous rampages in kindergartens, desperate residents setting themselves on fire... as the shocking events fill the headlines, China must confront the widening gap between its haves and its have-nots.



One China – Four Worlds

By Sherry Lee
From CommonWealth Magazine (vol. 449 )

Recently, I ran into renowned sociologist Zhou Xiaozheng, who heads the Institute of Law and Sociology at Renmin University of China. Zhou, who is in his sixties, looks very gentlemanly in his smart, simple outfit, but when he talks he is all but gentle and moderate, getting right to the point.

Zhou is a regular commentator in talk shows on Chinese television and has recently been teaching Chinese Communist Party officials. In his courses he has vocally alerted them to China's manifold crises and social ills. Look at the Foxconn assembly line workers who keep jumping to their deaths, repeated incidents of children being chopped to death in Shenzhen and Shanghai, and local residents immolating themselves out of protest against their relocation by the government... "This is a never-ending chain of violence," Zhou warned.

Where does the violence that pervades China come from? Its cause is nothing other than the drastic change in wealth distribution across the country.

Zhou explains that Communist China has seen two major turning points during its 60 year history: the first when it abandoned capitalism for "one equality" (everyone equally poor) – a path it pursued for thirty years – and the second which ended up with a society of "divided extremes" of wealth.

How is wealth distributed across China?

Between 2008 and 2009 the number of Chinese millionaires with assets worth more than 10 million renminbi rose from 825,000 to 875,000, according to rough estimates by the Chinese government. Within just one year, 50,000 more Chinese struck it rich.

The number of super rich with assets in excess of 100 million renminbi increased by 4,000 during the same period, from 51,000 to 55,000. China even has some 2,000 billionaires with assets of more than 1 billion renminbi and more than 100 mega rich worth more than 10 billion renminbi.

Not long ago Xincaifu ("New Wealth"), a monthly Chinese business magazine, came out with its latest list of China's 500 richest people, which showed that 88 had made their fortune in real estate, owning an average 7.38 billion renminbi per person.

The super rich at the top of the wealth pyramid are rapidly increasing, while the average peasant at the bottom earns less than US$5,000 per year.

In other words, some 310 million people in China have an income that is on a par with that of people in France or the United States, but there are also hundreds of millions living at the bottom of society in abject poverty. "Don't forget, China's current success is built on 300 million people taking advantage of 1 billion cheap laborers. And the unfair judicial system and the unfair distribution of wealth are making the challenges even greater," Zhou says with a tone of stern reproach.

Income Inequality Hits Record High

Some say that today's China is "one China, four worlds," which refers to the vast regional wealth gap between the rich metropolises such as Beijing, Shanghai and Guangzhou, moderately wealthy provincial cities, poorer county-level cities, and the vast dirt-poor countryside and western interior.

In Kangbao County, Hebei Province, about 200 kilometers from the nation's glittering capital, local peasants might not get more for lunch than a bowl of pickled cabbage and a plate of cooked potatoes. Yet in Beijing's renovated Qianmen Street commercial district, a meal at a luxury restaurant can easily cost 1,000 renminbi, the equivalent of several months' income for a peasant. China's Gini Coefficient – a measure of overall income disparity – surged to an alarming 0.47 last year (the internationally accepted warning line being 0.4) and is feared to top 0.5 this year, which would be a historic high.

Even within cities, the income gap is huge, reaching a Gini Coefficient of 0.36.

The social stratification of residential areas in Beijing and Shanghai is also very obvious. The rich live in upscale compounds, while laborers who have moved in from the countryside live in old neighborhoods on the fringe of the city, in cramped quarters of a few square meters in dark basements or restaurants.

"Bei Bei," who has moved to Beijing from Tonghua in northeastern Jilin Province, works in a nail studio, doing a daily 12-hour shift squatting in front of her customers to massage their legs and paint their fingernails and toenails. At 3,000 renminbi, her salary is not bad. But she needs to spend 500 renminbi on rent alone, for a small place in the basement of a high-rise.

Bei Bei says she is quite satisfied with her current life. "At least I get a decent salary, and compared to everyone else in my family, who eke out a living by farming a few acres of land, my future looks promising. When I'm tired, I still can go out and eat grilled meat skewers,c the 20-year-old says cheerfully. But she cannot understand why some customers like to boss her around and address her impolitely.

Severely Distorted Wealth Distribution

In his report to the 17th National Congress of the Chinese Communist Party, Chinese premier Wen Jiabao stated that China needs to create "a reasonable and orderly pattern of income distribution." Chinese leaders believe that an olive-shaped income distribution with a vast majority of medium income earners in the bulging middle is very important for social stability. Only a large middle class can prevent society from disintegrating due to tension and intensifying unrest.

But after 30 years of market reforms, wealth distribution has become severely lopsided. And in contrast to what Chinese leaders originally had in mind, class conflicts are spreading.

In particular, the second generation of laborers with rural family origins now living in the cities is different from the docile older generation. Instilled with a modern education and values, they believe they should enjoy the same rights as urban residents. When they feel like second-class citizens, they do not hesitate to vent their anger.

In a recent field study, Li Shi, director of the Income Inequality and Poverty Research Center at Beijing Normal University, found that the crime rate for laborers with rural origins between 20 and 30 years of age is relatively high, because they lack stable incomes. Compared to other developing nations, discrimination against laborers with rural origins is particularly serious in China.

In the wake of the Foxconn suicides, there has been a widespread trend toward hiking average wages, which has somewhat restored the self-respect of the workers on the production lines. But more lies in the background behind China's unequal income distribution than just low basic wages. Factory workers don't have labor unions that fight for their interests, and there are no social welfare guarantees such as publicly funded insurance, medical care or access to education. Further aggravating the already severe inequality is China's rigid household registration system, which inevitably divides the population into rural and urban households, and the concentration of money and power in the hands of a privileged class.

The red giant needs to pause and ponder how this chain of violence can be broken.

Translated from the Chinese by Susanne Ganz