Disparity Between the Rich and the Poor in China - Research Paper Example

 Disparity Between the Rich and the Poor in china China’s rapid economic growth brought about by the opening up of the Chinese economy has also brought several problems for the country. In addition to the environmental degradation, social and cultural issues, a major offshoot of the tremendous economic growth of China has been the growing gap between the incomes and consumptions of its rich and poor. According to the United Nations Development Programme, China’s Ginni Coefficient (that measures income inequalities on a scale of 0 and 1 – with 0 as no inequality and 1 as absolute inequality) was 0.47 in 2007- 2008 (World Bank, 2007). This is much higher than all the other developed nations of the world, with only a few Latin American and African nations having a higher coefficient than China. Also, the figure of 2007 is much higher than the pre-reform era figure of 0.16 (China Economic Net, 2005), indicating the rapid increase in disparities between the rich and the poor in China over the last few decades. According to the Institute of Labour and Wage Studies of the Ministry of Labour and Social Security, China, the nation’s income disparity had already reached the danger level and was headed towards an out right disaster level (China Economic Net, 2005). The problem of income disparity in China has become so acute it has given rise to widespread speculation about the future of China. Western scholars who have been studying the immense growth of China in the last few decades postulate that the trend is unsustainable and may result in upheaval in the near future (). This upheaval may be in the form of social and economic disintegration of the nation as there are already regions that are rich and regions that have fallen out of the economic gains and are increasingly growing poor. For example, China’s disparities in income are all the more apparent between the rich coastal regions and the extremely poor hinterlands of China (Mann and Mann, 2007). According to the World Bank, over 200 million Chinese live below the international poverty line and most of them are engaged in the traditional farming sector. (You, 2005) Others from both within and outside of China have postulated that there may be a political strife in the near future as the poor classes may turn to violence and take up a newer class struggle (You, 2005). An argument put forward to belittle the growth in income disparities in China is that due to the opening up of the Chinese economy, a large section of the Chinese poor actually moved up the economic ladder to become the ‘middle classes’. This happened along with the rich people getting even richer and the poor people getting more wealth to climb out of poverty (China Daily, 2006). However, this contention, though true, as China has pushed up nearly three-fifty million people as the new middle class, cannot belie the fact that there has been an increase in income gap between the rich and the poor. Whatever the prognostics of about the future of China may be, there is an immediate need for the Chinese government to arrest the inequality and ensure that all sections of the Chinese society benefit from the economic gains of the nations. Towards this, there is a need to first understand why the income disparities have occurred manifold in a society that was largely classless and equal before the economic reform process started in China. A major reason for this income disparity is the inequitable development of the various economic sectors of China (Xinhua News Agency, 2003). On the one hand, Chinese urban sectors like the manufacturing and the service industry have expanded and profited exponentially with the economic reforms, its agriculture and farm sector have stagnated. The farmers and agricultural laborers not only earn considerably lesser than their urban counterparts, they are also not provided with the basic civic amenities and public services that add to their plight. Further, they are increasingly deprived of the governmental subsidies that are available to the residents of towns and cities. Another reason cited for the income disparity is the governments partiality towards investing in its already rich shore regions while leaving neglecting the already poor western and central regions (Xinhua News Agency, 2003). This governmental neglect has been evident in the disparity in the educational and transport infrastructure provided for the central regions which further pushes these regions behind in terms of quality and efficiency of manpower and services. While the governmental actions can be attributed to the intention of pushing the regions and sectors that have the highest potential for growth, there is still a need to ensure that the other and already backward regions and economic sectors are not neglected completely. There have been some initiatives already taken by the government of China towards this, for example, the Great Western Development project, but, there has been a lack of commitment and vigor in implementing the same (Ling, 2008). Further, the government plays a dominant role in the market economics, often distorting the market dynamics by its interference and thus preventing a more holistic growth of the potential (Mann and Mann, 2007). Another cause for the deteriorating conditions in China is the widespread and all pervasive corruption. Corruption has seeped to all the sections of the society and even in the governmental corridors and has led to the misappropriation of governmental grants and funds that were originally meant for fighting poverty (You, 2005). Numerous entrepreneurs have bribed their ways into getting governmental funds and contracts that could have otherwise benefited the poor sections of the society. Large enterprises have gained monopolistic hold of the sectors and governmental officials have accumulated vast amounts of wealth for themselves. The various causes listed above for the growing gap in the rich and poor in China need to be looked into by the government of China if it wants sustainable development for the nation. The trends, as it is now, will only lead to chaos and probably internal disturbance in the near future as predicted by several experts and scholars. The government of China needs to take several immediate steps if the trend has to be arrested and the income disparity gap closed. Firstly, there is a need to take into account a fair distribution of resources, projects and developmental plans for the entire land, especially the central and the hilly regions of China. Any developmental programs should not only focus on efficient delivery of the outcomes but also on the fairness of allocation of resources so that the poorer sections of the society are able to benefit from the governmental initiatives. Secondly, there is a need to take into account the plight of the rural sector especially the farms and agriculture sectors. This sector employs a large section of the Chinese population and any refirms benefiting this sector are bound to impact upon the income of this section of the Chinese society. Thirdly, there is an immediate requirement to reduce the undue governmental interference in the market and let the development and growth follow a more natural path. This would ensure that not only market efficiency is achieved but also that the deserving entrepreneurs may progress and create wealth for others as well. Finally, the most important issue that needs tackling is that of corruption. It is essential that government officials and all those who are involved in the market reforms process or in the distribution of resources and allocation of contracts etc., are made accountable. For this, there is a need to introduce transparency in all the governmental processes, and also to make the taxation system more rigorous and thorough for those who are rich. References: 1. China Economic Net, 2005. How to interpret Gini Coefficient in China available online at http://en.ce.cn/Insight/200509/13/t20050913_4669147.shtml Retrieved on 3 July 2009 2. China Daily, 2006'Income disparity inevitable in China', available online at http://www.chinadaily.cn/china/2006-08/11/content_662263.htm Retrieved on 3 July 2009. 3. Ling, G. F.  2008. China Developing: Cultural Identity Of Emerging Societies. Singapore: World Scientific Publishing Company 4. Mann J., and J. Mann. 2007.  The China fantasy. USA: Penguin Group 5. World Bank. 2007. World Development Indicators 2007. Washington, D.C. Available online at http://hdrstats.undp.org/indicators/147.html Retrieved on 3 July 2009. 6. You, M. Y. L. 2005. MAC Regular Press Briefing on ´Disparity between the Rich and the Poor in China Worsens and Causes Serious Impact on Social Stability’. Available online at http://www.mac.gov.tw/english/english/macnews/enews/enews940527.htm Retrieved on 3 July 2009 Read More