Ostensibly, China’s rapid growth over the past three decades should have brought economic benefits to both urban and rural communities. Granted, economic disparities would exist (and probably become greater) with continued growth; however, as Dr. Damian Tobin puts it, China’s widening gap between rich and poor represents, “one of the most fascinating contradicitons of China’s rapid growth under the auspices of the communist party.” Undoubtedly, the privatization of state enterprises has been an important driver of wealth creation, but this wealth has not been evenly distributed across both urban and rural communities (as clearly illustrated in Peter Hessler’s Country Driving: A Chinese Road Trip).
Dr. Tobin says further that, “such inequalities also highlight a contradiction in that although the monetization of previously state-owned assets undoubtedly benefited many of China’s emerging middle class, it ultimately came at a cost to the public who would now have to finance these goods and services out of personal savings.”
Clearly, wealth inequality is not a problem exclusive to China, as the U.S. has been fighting a widening income inequality gap for some time; however, China has now surpassed the income inequality gap seen in the U.S. In 2010 rural residents had a per capita disposable income that was less than a third of that seen in urban areas.
This expanding gap between income in urban and rural areas begs the question: is continued overall growth worth drastic increases in income inequality? Ultimately, continued economic growth in China should translate into benefits in rural communities, and the Chinese government has demonstrated that recognize this is an issue that needs addressing. “Since 2004 it has worked to raise minimum wages for migrant workers, improve rural incomes through tax cuts and enforce labor contract law.”
Source (text and media):
Tobin, Damian, Dr. “Inequality in China: Rural Poverty Persists as Urban Wealth Balloons.” BBC News. 29 June 2011. Accessed 26 Jan. 2015.
To what extent have the poor benefitted from growth? It is true that inequality is higher today than in the 1970s. However, to my knowledge no group in China has seen its income fall; inequality is due to differentials in income growth, some gaining mor than others. Unfortunately in the US inequality rose in part because the bottom 50% have actually seen real incomes fall; a big slice of the US population has seen things get worse in absolute terms, and not just in relative terms.
Empirically, keep your eyes open for information on the magnitude due to geographic issues, where regions fell behind? or age differentials? or – it’d be a long list, there’s a lot going on.
I could only find a GINI coefficient for China from 2004, when according to the world bank it was 37. This actually indicates relative equality (0= max equality, 100= max inequality), but I’m sure the situation has deteriorated in the last decade. Id be curious to see the GINI coefficant over time and its interaction with Chinese growth.