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The China house of cards - Part II

By Arthur Thomas - posted Wednesday, 4 February 2009


... 0.4 per cent of the population controlled 70 per cent of China's wealth’ and ranked China No 1 in terms of wealth concentration, the worst wealth [and] polarization found anywhere in the world …

The UN reported:

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... more than 300 million Chinese in some of the poorer regions of China live on US$1or less a day, six times more[people] than that [sic] reported by Chinese authorities.

While China's open-door policy produced 900 per cent growth in its economy, only a few appear to have benefited.

Wage gap

On average, China's low income families spend approximately 50 per cent of their total household income on food, minimising individual personal saving in the poorer sectors.

To estimate the level of real disposable income, it is crucial to factor in the impact of the "urban-rural wage gap" that has been increasing annually over the past 11 years. At the end of 2007, urban workers earned more than three times that of rural workers: this gap continued into 2008.

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Average annual urban income for 2007 was about US$2,000, while the average annual rural income was about US$700 a year. This gap widens when factoring in inflation, at 4.5 per cent for urban but 5.4 per cent for rural. It widens even further when factoring in the lack of a pension scheme and exclusion of the rural sector from unemployment benefits.

Health also plays a crucial role in the rural sector where the average hospital stay costs the equivalent of two years’ wages.

China's class structure

Regardless of the philosophy of the Communist State, five distinct classes exist throughout China:

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About the Author

Arthur Thomas is retired. He has extensive experience in the old Soviet, the new Russia, China, Central Asia and South East Asia.

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