Rich get richer on back of stock market bubble as inflation bites into the poor
CASE STUDY A: Like tens of millions of mainlanders, Jia Lanying has had to change her buying habits to cope with sharp rises in the price of pork and eggs, staple foods for any Chinese family. The Beijing-based researcher, who has a monthly income of 2,000 yuan, said she could now afford to buy only half the amount of pork she used to. 'I buy about 500 grams of pork once a week, whereas I used to buy a kilo, because prices have risen from 7 to 8 yuan per 500 grams a few months ago to 14 to 16 yuan now,' Ms Jia said while shopping at a supermarket in eastern Beijing.
CASE STUDY B: Austin Lin made his first windfall by investing in a luxury apartment in 2002 with 1 million yuan and sold it for three times as much in 2005 when the central government launched a crackdown on property speculation. The high-income professional then plunged into the stock market with the proceeds of the sale, just as the mainland's stock markets began climbing after a four-year bear run. Shanghai share prices have risen just about fivefold since then; almost doubling last year. And Mr Lin has made as much in stock investment in the past two years as he did in property previously. 'I've made many times more money in investment than through my salary in the past five years,' he said.
Those two very different stories are a typical reflection of the mainland's economy last year - when 'rising prices' became a catchword.
A fifth consecutive year of double-digit growth was accompanied by a surge in prices for property, stocks, food, daily necessities and almost everything saleable.
The convergence of an asset bubble and inflation made rich people richer and poor people poorer. Wealthy investors got richer from booming stock and property markets, while ordinary citizens were mauled by inflation.
Inflation started to become an issue on the mainland last summer when rising pork prices - the result of a disease outbreak - contributed to a surge in the consumer price index.