China's great divide

Beatrice Yeung, Hong Kong International School

Rapid growth has made China wealthy but it has also created a big gap between the rich and poor, and it is widening

Beatrice Yeung, Hong Kong International School |

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The mainland's rapid rate of economic development over the past 30 years has enriched the nation. While China has the second biggest economy in the world, its people are not wealthy. This is because the wealth generated remains in the hands of a minority.

The enormous income gap between the rich and poor in the country is becoming a growing divide, and this is causing many problems within society.

The underlying cause of the wealth gap is that the 30 years of economic policies had favoured some groups over others. These policies focused only on certain regions of the country, leaving many people living beneath the poverty line, particularly in rural areas. For example, Guangdong's gross domestic product per capita is US$7,000, while Guizhou's is US$1,500. More than half of the mainland's population live in rural areas, but they share less than 12 per cent of the country's wealth.

Other causes of this divide are the exploitation of workers and corruption. Government policies allow companies to maximise their profits, which means workers barely get anything. No province meets the international minimum wage standard, yet many managers in state-owned companies have enormous incomes.

The wealth gap, which has exceeded reasonable limits, is displaying a broadening trend. If not tackled promptly, this problem may lead to social instability. In fact, it has stirred public disaffection, simmering discontent that has provoked protests and even violent clashes in labour disputes.

There have been an increasing number of mass disturbances because of the widening wealth gap. The government linked a spate of public protests to perceptions of social inequality because of the gap. One example is the labour action at the Foxconn Technology Group in Guangdong, with workers demanding higher wages.

China's wealth gap will also lead to future social problems. The poor will be disillusioned. Those at the bottom of the economic pyramid will see wealth at the top, but the lack of opportunity makes it impossible for them to advance and move up the social ladder.

Apart from adjusting income taxes to ease the burden on middle-income earners, the government is showing no sign of confronting the problem with any major policy shift.

China's economic wealth gap is creating a host of social problems, which will eventually affect future generations. This is an issue that the government needs to tackle immediately if it were to hope for a better future.