China, which has emerged from abject poverty, is sinking into inequality


Posted 4 days ago

Poor immigrant family in their makeshift shelter near a construction site, south of Shanghai, in China’s coastal Zhejiang province. (Source: SCMP)

By the end of 2020, the Chinese Communist Party had officially declared that China was emerging from extreme poverty for the first time in its history. In his opinion, there are no Chinese who die of starvation. Of course, but the fact is that inequalities between the rich and the poor are growing.

Clearly, the progress of the Chinese economy is astounding, and in this view, the $ 14,000 billion that represents total Chinese output is almost a miracle compared to the state that existed another 20 years ago. But in reality, what is the standard of living of Chinese compared to citizens of other countries? While China’s overall GDP is remarkable in itself, other measures point to a more mixed situation.

Nominal per capita GDP is measured against the dollar, the world’s reserve currency, and China ranks 72nd behind Mexico and Turkey. In 2021, according to the IMF. This indicates that China has slipped to 77th place in terms of per capita GDP, which is calculated as equivalent purchasing power parity, i.e. the equivalent purchases between countries for a fixed amount. According to the 2020 IMF classification.

Behind third world countries

The United States ranks 5th in the nominal rankings (behind Luxembourg, Ireland, Switzerland and Norway) and 7th in terms of purchasing power parity. In fact, American performances are quite extraordinary, because this nation ranks fifth in a classification, where small homogeneous and socially stable economies stand apart, while the United States is a great economic power, manifested by very diverse and strong social inequalities.

By comparison, China’s ranks 72nd and 77th, behind the poorest Third World countries, and its overall GDP ranks second in the world behind the United States and, perhaps, sooner than first.

This sharp contradiction allows China to be considered an economic superpower and an underdeveloped country. This is evident nationally by the fact that the super-rich Chinese lead the same lifestyle as the wealthy Westerners, while Michael Santi, a macro-economist and specialist in the financial markets, underscores that the vast majority of their fellow citizens live worse than the Guineans. In an article published in the newspaper Jan. 2, the central banks Gallery.

Of course, inequality is a phenomenon that exists in all countries and is unfortunate. The fact is that even within the United States, the most unequal western country in the world, the poor have a standard of living comparable to that of Guinea.

Xi Jinping’s history of his country, and especially Mao’s Long March, made the Left, the peasantry and the poor federations of the time. Grand Hellsman was able to turn them into an army to overthrow the regime, which is accused of promoting injustice and inequality. Let us recall the tragic episode of the Great Leap Forward (1958-1962) in which more than 40 million Chinese died of starvation, with credible information reporting cannibalistic scenes. It is through this prism that we must see the hunt for the super-rich in China today, with the declared aim of proving that the Communist Party is interested in the poor.

However, the actions of Xi Jinping and his followers will adversely affect the Chinese production machine, and thus their country’s GDP. So the Chinese leaders are on a kind of dilemma. Faced with poverty in their regions, which are comparable to some of the poorest countries in the world, they are forced to take drastic – often dramatic – steps to show their citizens that they are determined to fight this scourge, knowing that their actions are undermining their confidence. The business community in their economy, so the weakening of this GDP makes them – right – very proud.

“Fair” redistribution of wealth

A few months ago, Chinese President Xi Jinping called on his wealthy Companions to do more. “Public Prosperity” A. and promised “Settings” In a country where excessive incomes and rapid economic growth have simultaneously increased inequalities.

China’s standard of living has improved significantly since the 1970s. But the differences in wealth are significant, because while China holds the world record for the number of billionaires in dollars, it was only last year that the country officially “eradicated” poverty. A declaration of victory by some independent observers.

At a meeting on the economy, Chinese President Xi Jinping called for redistribution last August. “Fair” Wealth that can be utilized “For all”. It is in the interests of social equality that action be taken “Increase the Income of Low-Income”.

But Xi Jinping did not specify how he intended to achieve this goal. However, its proposals generally set the tone for the country’s priorities in the coming months. The meeting was further encouraged “Equity” In the case of education, at a time when the prohibited costs of private tutoring are on the rise. In July, Beijing tightened its grip on the lucrative education sector that wants to make it non-commercial. The number of courses will be significantly reduced. The move shocked many Chinese parents, who were passionate about their children’s success, and routinely enrolled their children in extracurricular courses.

“Large common pot”

A little historical reminder. At the beginning of the People’s Republic of China in 1949, almost the entire population lived in poverty. But the economic reforms that began in the late 1970s saw the emergence of great fortunes, according to then-leader Deng Xiaoping. “Normal” In 1984, some became richer than others.

While open coastal areas were rapidly upgraded for international trade, rural areas in the hinterland experienced more rapid growth. In recent years, the authorities have stepped up efforts to rectify the situation, find needed housing, distribute subsidies and complete key infrastructure.

In fact, income inequality in China is one of the worst in the world. The gap between rich and poor is the same as in the United States. It can be admitted that by 2021, China will record about 8% GDP growth. But here, too, the shoe is pinching, as this growth is expected to stabilize at around 5% by 2022, mainly due to the slowdown in domestic consumption. . Let us remember: China has achieved double-digit growth for decades, with unparalleled performance in the world as a result of the famous economic reforms initiated by Deng Xiaoping in 1978. But today it is clear that the wealth gap is widening. According to the US Gini Index, which measures the income gap, China lags far behind Europe and the United States in the list of the world’s most unequal countries.

Between 1978 and 2015, China moved from a poor developing country to a burgeoning economy. As a result, China’s share of global GDP rose from less than 3% in 1978 to about 20% in 2015. According to official statistics, the per capita monthly income was approximately യൂറോ 120 in 1978 (equivalent to the yuan / euro calculated in 2015). This income exceeded 1,000 1,000 in 2015. The per capita national income, which was less than 6,500 yuan (1,400 euros) in 1978, rose to 57,800 yuan (12,500 euros) in 2015. But the distribution of wealth is difficult to assess. In this country where official figures are questionable and the economy continues to operate opaquely.

We know for sure that the private sector was a locomotive of Chinese growth during this period. At the same time, public ownership of national wealth fell from about 70% in 1978 to 30% in 2015. Chinese families now own 95% of the home, up from 50% in 1978.

In short, China is not really a communist now, but has been gradually adapting to a semi-capitalist system since 1978. The result: The level of inequality in the 1970s was much lower than in Europe, and today it is closer to the United States. In 2015, the poorest 50% of China accounted for about 15% of the country’s total annual income, up from 12% in the United States and 22% in France. This compares with the richest 1% Chinese, who represent 14% of the country’s income, 20% in the United States and 10% in France.

Still, returning to the Maoist policy of “big public vessel” would be a dangerous game. The Chinese, who suffered the tragedy of the Cultural Revolution (1966-1976), will certainly reject the return to the practices of Grand Hellsman. This would be a disastrous sign for financial markets and foreign investors, who are already reeling from the virtual bankruptcy of a large part of the real estate sector and the massive Chinese public debt.

Written by Pierre-Antoine Donut

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About the author

Former AFP journalist Pierre-Antoine Donut is the author of fifteen books on China, Japan, Tibet, India and major Asian challenges. In 2020, this former correspondent in Beijing co-authored with Edison DL Obey to publish “The Global Leadership Asked, The Conflict Between China and the United States.” He is also the author of “Tibet mort ou vive”, published by Galimard in 1990 and republished in an updated and expanded version in 2019. His latest book, “China, the Great Hunter”, was published in 2021 by Editions DL Ob.

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