The Rich and Poor in China

Currently, the second most millionaires on the planet live in China. A number only topped by millionaires living in the United States. What makes this even more astonishing is how fast the number of Chinese millionaires is increasing. However, poverty is still pressing issue for China and one of the major concerns of the Chinese government.

A Chinese family hace dinner at their makeshift shelters next to a construction site of new buildings in Zhejiang province. Photo: Reuters

A Chinese family hace dinner at their makeshift shelters next to a construction site of new buildings in Zhejiang province. Photo: Reuters

Poverty still a pressing issue

In 2012 approximately 1.5 million millionaires lived in China. In 2013 the number increased further to 2.4 million. Eventually, the number of millionaires is projected to double again until 2015. Without a doubt impressive numbers. But according to senior government development official Zheng Wenkai over 82 million Chinese still live on less than about US$1.25 a day. Hence, plenty of people that did not benefit from China’s incredible growth rates so far. This number is even higher if the Worldbank’s definition of extreme poverty is taken into account. Those are people who have less than US$1 a day. Thus, as Wenkai admits the number of poor Chinese can be considered to be actually closer to 200 million. Which implies that every sixth Chinese person is poor.

Those segments of Chinese population not only have insufficient amounts of capital but also have no access to clean water, electricity, and health care. They often live in rural areas that are regularly hit by natural disasters such as earth quakes, droughts, and floods.

China successful in fighting poverty

Nevertheless, one cannot deny that China made impressive progress in regards of fighting poverty. Over the last 20 years China’s GDP grew by an average of approximately 9% per annum which helped the government to lift more than half of 1.3 billion Chinese out of poverty. The average per capita income today is tenfold as compared to the per capita income in 1980. Around 350 million Chinese enjoy a lifestyle today that is similar to the lifestyle of people in the developed countries. Moreover, China contributed significantly to bisect global poverty until 2015. An essential objective in the United Nations’ Millennium Development Goals.

Accordingly, extreme poverty is barely visible in Chinese cities. There are still many migrant workers but most of them earn enough to afford decent accommodation and are additionally able to send money home to their families in the countryside.

The places were extreme poverty can still be found

Hence, the question where poverty can be found remains unanswered. Not too long ago the answer was obvious. The poorest Chinese people were found in the countryside far away from shiny cities and promising opportunities. A lot, however, has changed. Tremendous infrastructure projects initiated by the government in Beijing helped to connect rural areas to the prosperous rather industrialized eastern parts of China. In particular, large industrial areas were created and helped poor provinces such as Guizhou, Gansu, and Yunan to achieve the highest growth among Chinese provinces.

Most of the extremely poor people are farmers who live in the particularly remote areas in the west and north west of China. Here, farmers live on assigned ground and pursue subsistence farming. It is assumed that it is only a matter of time before those people achieve better living standards as well.

The risk of a widening gap between rich and poor

What China should be concerned about in the meantime are the extreme differences in wealth and incomes. According to a study published by Beijing University 1% of the population controlled more than one third of the entire wealth in 2012. The bottom quarter, however, controlled only 1% of the wealth. While the progress made in fighting poverty is remarkable the gap between the poor and the rich is considerably widening. According to researchers at the University of Michigan the Gini coefficient, a measure of income distribution, for China was at a high 0.55 (United States: 0.45), the higher the coefficient the more inequality. The last thing the Chinese government could use in addition to demands for more democracy are intensified social tensions evoked by increasing inequalities in regards of income and wealth. Especially in times of slower growth and when the previously made promises are increasingly difficult to keep.


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2 Responses to The Rich and Poor in China

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