Growing Gap between Poverty and Wealth in China - Essay Example

Growing gap between poverty and wealth in China In late 1978, the Chinese leadership began changing China’s economy from a slow, unproductive, Soviet-style central economy into a market-oriented system. Despite the system operates within a political framework of strict communist control, the economic influence of non-state organisations and individual citizens has been continuously increasing. The authorities switched to a system of household and village responsibility in agriculture in place of the old collectivisation increased the authority of local officials and plant managers in industry, allowed numerous small-scale enterprises in services and light manufacturing, and opened the economy to increased foreign trade and investment. The result has been a quadrupling of GDP since 1978. Measured on a purchasing power parity (PPP) basis, China in 2003, stood as the second-largest economy in the world after the US (China Economy, 2005). Consequences of growing economy However, the imposing growth rate of China’s economy is not without its consequences. Inflation and unproductive state-owned enterprises block the rise of the Chinese economy. What Chinese officials often neglected to mention, that one farmer at the end of one rake struggling to feed his family kept fuel consumption very low indeed. It was not, by any stretch, efficient. Matching conditions still exist today (China’s growing, 2003). Rumors of the magnificent prosperity of the south and eastern provinces have reached the more isolated-and less prosperous-interior provinces. Those current farmers who would travel in order to be more prosperous themselves are often blocked at the borders of industrial growth and discouraged to proceed (China’s growing, 2003). For example, most of the 6,000 workers who died in Chinas coal mines recently, were migrants from the countryside in search of work (China warns on, 2005). Today, 80 to 120 million surplus rural workers are adrift between the villages and the cities, many subsisting through part-time, low-paying jobs (China Economy, 2005). Everyone in China seemingly wants a share, but the industrial provinces can physically support no more drain on their existing housing and infrastructures, and they are finding themselves unable to enhance their current positions despite their economic prosperity (China’s Growing, 2003). Moreover, China thus has periodically backtracked, retightening central controls at intervals. Moreover, the Chinese government has struggled to (China Economy, 2005): (a) Sustain adequate jobs growth for tens of millions of workers laid off from state-owned enterprises, migrants, and new entrants to the work force. (b) Reduce corruption and other economic crimes. (c) Keep afloat the large state-owned enterprises, many of which had been shielded from competition by subsidies and had been losing the ability to pay full wages and pensions. Growing gap between poverty and wealth The gap between rich and poor in China is rapidly growing and could even threaten the country’s stability. In just 20 years, China has gone from having virtually no income gap to having one of the worlds biggest (China sounds alarm, 2002). Growing wealth in cities like Shanghai has not been shared by rural areas (China warns on, 2005). The country was now in a "yellow-light" zone, the second most serious indicator of "social instability", according to an official report focusing on the growing gap between rich and poor. If there are no effective solutions in the next few years, it is going to hit red-light scenario after 2010 (Spencer, 2005). According to the China Poverty Relief Fund, nearly 30 million Chinese live in absolute poverty (China warns on, 2005). Earlier in September, the Organisation for Economic Cooperation and Development (OECD) produced an imposing report on Chinas economy. In its first analysis of the country, the OECD said Chinas economy had grown by an average of 9.5% a year over the past 20 years. However, the most affluent one-fifth of Chinas population earn 50% of total income, with the bottom one-fifth taking home only 4.7%. The average rural income is 2,936 yuan ($362), less than one-third of the urban income of 9,422 yuan (China warns on, 2005). Consequences of the growing gap between poverty and wealth Growing public recognition of the simmering discontent that has provoked protests and sometimes violent clashes in disputes over labor, pollution and other issues. Attention has focused especially on maltreatment of migrant workers from the countryside, in the wake of a case involving a construction worker who killed four people when he despaired about his pay. However, apart from adjusting income taxes to reduce the burden on middle-income earners, there have been no signs the government plans to face the problem with any key policy changes (Kurtenbach, 2004). Closures of old state industries and stagnating rural incomes led to protests by laid-off workers and poor farmers. Meanwhile, resentment is growing over abuse of power and rampant corruption among high officials and well-connected businessmen. The futility of the legal system and economic levers make it hard to reverse the worsening trend in income differences (China sounds alarm, 2002). People are showing great discontent with the irrationally high income gained through the monopoly of industries, and with the legal gains derived from graft and corruption, and power-for-money transaction (China sounds alarm, 2002). Moreover, the wealthy also consisted of those who gained wealth through conspiracy with officials in power-for-money deals, or because they happened to work in monopoly companies or through stealing state assets (China warns on, 2005). Rioting is now common event in many Chinese towns, often triggered by protests against the mixture of corruption and environmental degradation that the rush for growth has brought. As example, are the latest wave of protest in the eastern province of Zhejiang where buildings and police cars were set alight in clashes led by parents who accused a battery factory of giving their children lead poisoning (Spencer, 2005). Just like in any growing country, China’s gap between poverty and wealth shall continue to grow unless the Chinese government would take bold measures to confront the problem. Neglecting this would lead to a wider civil unrest in the next few years. For example, the average income of a Chinese worker in urban areas is $1,000 a year, whilst the worker in countryside receives only an average of just over $300. Furthermore, the wealth gap is evident anywhere in China today, from elderly Chinese citizens digging through downtown trash bins for plastic bottles to recycle to migrant shacks squeezed between luxury villas in Shanghais suburbs. Amongst the wealthiest are private business owners whose fortunes were built through hard work and talent and those whose riches came from corruption and crime (Kurtenbach, 2004). Reference List China economy [online]. (2005). Sinoaid.com. Available from: [25 Dec. 2005]. Chinas Growing Economy [online]. (2003). FreeEssays.cc. Available from: . [25 Dec. 2005]. China warns on wage gap unrest [online]. (2005). British Broadcasting Corp. Available from: [25 Dec. 2005]. China sounds alarm over fast-growing gap between rich and poor [online]. (2002). Mindfully.org. Available from:http://www.mindfully.org/WTO/China-Wealth-Gap11may02.htm. [25 Dec. 2005]. KURTENBACH, ELAINE. (2004). Gap Between Chinas Rich, Poor Alarming. Calkins Media, Inc.,The Associated Press. Available from: [25 Dec. 2005]. Spencer, Richard. (2005). Wealth gap threatens stability in China. Freerepublic.com. Available from: http://www.freerepublic.com/focus/f-news/1468586/posts [25 Dec. 2005]. Read More