Are The Rich Getting Richer And The Poor Getting Poorer In China Still Today?
Introduction
In china, just like in any other society, there are low and high income earners. Currently, there is a wide gap between the rich and the poor in the country. This gap still continues to widen since the high income households experience a higher increase in income as compared to the increase in low income households. The rich continue to gain more wealth from their investments in different sectors such as manufacturing industries and real estates. On the other hand, the poor continue to suffer in poverty as they gain very little increase in their income. This implies that the income levels of the rich rise excessively as compared to those of the poor members of the society. This has resulted to a serious problem where poverty has become too high to the extent of endangering the safety and health of the poor. Such has necessitated the intervention of the government. The Chinese government has put in some efforts to help reduce these gap between the poor and the rich. These efforts have been fruitful although they are not enough and hence more has to be done. Therefore, this research paper argues that the rich in China continue to get richer while the poor continue to get poorer.
Researchers have established that there is a significant increase in the wealth gap in the rural areas in China and this poses a major problem to the country. Beijing has made the alleviation of poverty a primary priority. The Chinese academy of social sciences (CASS) in its annual report indicated that there is a noticeable reduction in the gap between different regions. However, the expansion in the inequality between diverse income groups still continues to prevail in china. Groups that earn a high income still continue to earn even higher incomes while the groups with lower income continue to earn lower income to the extent that their income can no longer meet their basic needs. Such has resulted to a scenario where the rich in china continue to get richer due to the higher incomes while poor continue to get even poorer today.
In 2016, the rural residents in china had an average annual disposable income of 12,363 Yuan which is 1,797 US dollars. This represented an increase of 6.23 percent as compared to 2015.However, it is not all the groups of rural residents who had experienced the increase in their rural income. On the other hand, the high income groups experienced an increase in annual disposable income of 9.8 in the same period while the middle-low income groups experienced an increase of 8.4 percent. This figures indicate that the gap between the incomes of the high income-groups and the low-income groups continue to get wider. Although disposable income for both the high-income groups and the low-income groups increased, that of the low-income groups increased at a lower rate as compared to the rate at which that of the high income groups increased. According to @@@@, the growth experienced in the disposable income has not been even and such has resulted to a scenario where some individuals and especially the low-income groups have experienced a decrease in disposable income.
The report by CASS stated that the income distribution among the low-income groups has become more complex and complicated. It has become very difficult for the rural residents to keep up with the income growth momentum. Such poses a great problem since while the disposable income of the high income groups and medium income groups is growing steadily, the disposable income of low-income groups, increases at a slower rate. The major problem that arises from these incident is that central communist party leadership has to spend a lot of resources in an aim to elevate poverty.
Gap between the richest and the poorest in china
The wealthiest 100 people in china have more wealth as compared to two fifth of the poorest population combined. Research indicates that back in the year 2018 the 100 wealthiest people had an accumulated wealth of 643 million US dollars. On the other hand, the lowest 40 percent of the households in China which are comprised of approximately 425 million adults have a combined wealth of only 637 billion. This shows that there is a very wide gap between the richest and the poorest in china. This gap continues to expand every day and it has become a great challenge to change this trend.
Most of the ultra-rich people in china acquired their wealth from industries in which they have high monopoly power. Another portion of these individuals made their money from real estate. On the contrary, only a few people in the high-tech entrepreneurship field who are able to appear in the list of top 100. So far, china has made significant efforts in improving the living standards of its people. This has seen millions of people being helped to come out of extreme poverty. Since 1978 to 2015, a great percentage of the population in china has experienced a tremendous increase in real income. Over this period, the real income of the lowest 50 percent of the households in china increased by approximately 5 times on average. On the contrary, the real income of the wealthiest 0.0001 percent tremendously increased by approximately 40 percent. This kind of growth is extraordinary since the wealthiest population continue to get richer every day. From such statistics, it can be concluded that the poor individuals in china continue to get poorer and such is attributable to the slow growth in their real income. This kind of income growth has seen china being classified as one of the top countries with unequal distribution of wealth and income.
China’s Gini Coefficient
Gini coefficient is a measure of income inequality and it ranges between 0 and 1 or from 1 percent to 100 percent. A higher score is an indicator of high level of income inequality. Using the Gini coefficient to measure the income inequality, china hit the 0.491 mark back in the year 2008. Since then, the Gini coefficient has slightly decreased. For instance, in 2009, it dropped to 0.490 while in 2010 it decreased further to 0.481. Last year December, the Gini coefficient was 0.465. The average Gini co-efficient data since December 2003 to 2019 is 0.474 NA.
The decline is attributable to a decrease in the income share of the country’s top 20 percent but not as a result of an increase in the income share of its poorest groups. Currently, china has a bigger income gap between the poor and the rich as compared to the US. In china, the income distribution is more unequal that some countries that are classified among the world’s poorest such as South Sudan and Burundi.
Comparison of Income Inequality between China and Canada
To effectively compare the income inequalities between Canada and china, the Gini coefficient measure will be applied. As earlier stated, when the Gini coefficient is higher, it implies that income inequality is also higher. In the year 2013, the Gini coefficient for china was 0.473 while that for Canada in the same year stood at 0.338. This indicates that in in 2013, the level of income inequality in china was higher as compared to the case in Canada. In 2018, the Gini coefficient for Canada was 0.312 or 31.2 percent while that of china was 0.468 or 46.8 percent. This figures support the fact that the level of income inequality in China is higher as compared to the case in Canada. Currently, the Gini coefficient for china stands at 46.5 percent while that of Canada stands at 32.1 percent. Therefore, it can be concluded that the level of income inequality in china is higher as compared to Canada.
———————
The international monetary fund (IMF) established that the growing gap between China’s poor and the rich or income inequality is as a result of the significant differences between Chinese rula areas and urban areas. The rural population in china has been left behind by the urban population in many aspects and this includes income, skills and education. The lack of skills and education has seen most Chinese end up being unemployed or without any considerable source of income. China has recently experienced a rapid advancement in technology. Such has seen the demand for skilled labor also increase steadily as that of low skilled labor dropped. Technology advancement has resulted to a scenario where automation and machines are replacing routine jobs in the country and those who don’t have enough education and skills are left behind. The majority of those who do not have sufficient education stay in the rural areas and such has seen the rural areas report low incomes while the urban areas report higher incomes.
The Hukou which is the local household registration system in the country hinders urban and rural migrants from gaining access to social benefits and education similar to those of people with local Hukou status. Migrant children in china are faced by a lot of challenges to the extent that it is difficult for them to even get basic education. Majority of the migrant children never finish middle school
Efforts to Address the Growing Gap Between the Rich and the Poor in China
The president of china, Xi Xinping has stated that he is fully devoted to wiping out poverty in the country and especially annual incomes below 2,000 by the end of this year. The president’s efforts has seen him become a delegate in Guizhou, where a large percentage of the population is made up of people who live below the poverty line. This is a clear indicator that Xi attaches a lot of importance to the issue of eliminating poverty in the country and reducing the gap between the high income groups and the low income groups.
The government of china undertands that there is a growing income inequality in the country and hence it has implemented several polices that are geared towards solving this problem. Some of these polices are agriculture taxes abolishment, increase in the minimum wage as well as the personal income tax reform. The government has also come up with other systems that are aimed at addressing the unequal distribution of income and these include medical care coverage (Yibao) and minimum income guarantee (Dibao) systems. Further, the government is currently working on increasing the 9 year old free education to cover up to children aged 15 years in both western and central regions. Such will see preschool and senior high school learners being included in the free education plan. This move will play a key role in ensuring all students are able to get education despite their parents’ level of income. Also, these children will be equipped with skills which they can apply in future to gain a higher income. Also, it opens doors for them to advance their education and gain even more skills for future use.
Analysis done recently indicate that these government efforts and policies have attained some level of success and there is some signs that the income gap between those living in rural areas and those living in urban areas is narrowing. For instance, back in the year 2016, the Chinese urban households had 2.7 times the disposable income of the rural households. This is a considerable decrease in the income gap as compared to 2007 where the urban households had 3.3 times the disposable income of rural areas. However, such does not mean all is well, since the ratio is still too high as compared to those of other emerging nations. There is still need to do much more in an effort to reduce the income gap. According to @@@, china is too far from closing the wide gap that exists between the rural households and urban households.
https://zhongguoinstitute.org/wp-content/uploads/2018/11/Income-640×361.jpg
Recommendations to Reduce the Level of Income Inequality
A country with a more equitable population has more efficient prospects of long-term growth. China needs to do much more in its efforts of ensuring an equitable society. The government of China has a great role to play in reducing the wide gap that exists between its low income citizens and the high income citizens. One of the most appropriate approaches which the government of china can apply to achieve this is the use of well-designed wealth transfer programs. These programs will be very helpful in ensuring that wealth is transferred from the richest population to the poorest. Since the richest individuals in china acquire their wealth in the industries sector and real estate sector, the government should consider taxing such sectors high and using these taxes to provide basic goods and services to the poor. This strategy has a major drawback being a scenario where the owners of these industries decide to pass on the additional taxes to the citizens. To mitigate these unwanted consequence, the government should come up with policies that will hinder such practices.
Another approach that is available to the government of china in its efforts to reduce the gap between its richest population and the poorest population is appropriate fiscal reforms. This includes approaches such as taxing the rich more to get money to provide public goods and services and exempting some sectors from taxes especially those dominated by the poor and rural residents.
The Chinese government should also offer equal educational opportunities to all the people. The best way to ensure this is by coming up with free education program to cover all the students in senior high school and beyond. Since this may be a very expensive venture, the government can consider giving the rural areas first priority. This is due to the fact that most of the low income earners in china live in rural areas and hence starting the program in such areas will be helpful in ensuring that children in rural areas get equal education to their counterparts living in urban areas. However, this does not imply that the program is only restricted in rural areas. It should be rolled out in urban areas with time based on the income levels of different areas. Areas with the highest number of low income individuals should be considered first. With time, the free education program for up to senior high school and beyond should cover the entire country.
The primary reason for focusing on equal educational opportunities to all as one of the strategies of reducing the inequality gap is that education contributes to improved skills among people. Education opens the doors for better careers in life. A learned person can get better and higher paying job as compared to an individual who is not learned. Further, low income households face a serious challenge in catering for their children’s education. Therefore, the free education program will relief these households the burden of having to spent their little income on education. Instead, they will be free to direct such funds to other needs such as food, investment shelter and others.
Still on the issue of equal educational opportunities, the Chinese government should consider offering considerable support to students in tertiary institutions such as universities, colleges and other learning institutions. One of the roles which the government can play in this case is by equipping these institution with the necessary leaning equipment to help facilitate preparation of the students. These equipment will be very useful in helping the students gain all the skills needed and providing them with a real-work environment experience. For example, the students studying medicine should be familiarized with the different technical equipment they will use in the workplace. Some of these equipment might be very expensive and the government should intervene where necessary. The government can also intervene by expanding on the low or no interest loans provided to students in tertiary institutions to help cater for the education. These loans are very important in financing the education of students and especially those from low income familiarizes. The loans should be provided to the students based on their needs. These from low income households should be offered more as compared to those from medium income and high income families. This will ensure that the students from low income families stay in school and learn just like the rest.
It is necessary for the government of china to consider expanding the medical care coverage system. The government is already on the right track so far concerning medical care. However, there is still need to do more. The Chinese government is in the process of ensuring that all its citizens receive affordable basic healthcare before the end of this year. The government should work harder to ensure all out of pocket costs are eliminated and especially among individuals from low income households. Residents in urban areas should also be considered since not all are high income earners. Both the provincial and central government should cover a higher percentage of the regular medical expenses of individuals living in rural areas. If the governments intervene in catering for medical expenses, it will play a key role in ensuring improved living standards among low income families. For instance, these individuals will be able to gain access to healthcare services and hence their health will be improved. Moreover, the money that would have otherwise been directed to medical care will be directed to other needs such as food, investment, clothes among other needs.
Equal Social Benefits
The Chinese government should offer equal social benefits to all the citizens. Social benefits refers to the current transfers that households receive and that are aimed at the provision of needs that arise from particular circumstances or events. Some of these circumstances or events include sickness, housing, retirement as well as unemployment. According to China’s national bureau of statistics, the unemployment rate in China stood at 5.2 percent in December last year before the outbreak of COVID-19. The unemployment rate is determined through focusing only on the urban population and in most cases, the rural population is not considered. If rural population is considered, then this figure can be much higher. The Chinese government should come up unemployment insurance like the case in some states in the US. Such insurance will help cushion the citizens from the adverse effects of unemployment. Such will be helpful in reducing the inequality between the employed and those without a stable source of income. The government should come up with reforms in pension schemes to ensure that retired individuals have enough funds to cater for their their needs. Most of the aged and retired population live in rural areas. Similarly, in the rural areas, the higher percentage of the households lie in the low income category. Therefore, reforms in pension schemes will help reduce the gap between the low income residents and the high income residents. It will also help in ensuring that the retired and aged individuals do not become a burden to the other family members who are already low income earners. Without considering these measures, it will be difficult to imagine that the inequality problem in China can really be solved.
Conclusion
In china, there is a high level of income inequality and the rich continue to get richer while the poor continue to become poorer. The rate at which the income of the rich increase is far much high as compared to the rate of income increase among the poor. When compared to Canada, the level of income inequality in china is far much higher. There are several recommendations which the government of china can consider in its efforts to solve the problem of income inequality. These recommendation include ensuring equal educational opportunities between the rich and the poor, expansion of the medical care coverage system, ensuring equal social benefits and the use of fiscal reforms.