A study shows that China has one of the largest gaps between rich and poor in the world:
The dilemma for Beijing’s new leaders is to try to make Chinese consumers, not exporters, the key driver of China’s economy. Why? China’s rich are already spending what they need, and pocketing most of the rest.
The low savings rate of most Chinese households surveyed suggest they simply don’t have the money to spend. To move toward a consumer-based economy, therefore, raising the income, and spending, levels for the poor is key.The data suggests China’s rich are already spending what they need, and pocketing most of the rest.Here the next generation of Chinese leadership can and should play a significant role. An effective approach to reduce the inequality and to boost consumption, however, is to shift government spending priorities away from massive infrastructure development: roads, railroads and airports; and toward social welfare investment and income transfer programs.