Exit from poverty and inequality
China’s growth has lifted the vast majority of the population out of poverty. The poverty rate, at 97.5% in 1978, is currently between 1 and 2%. The boom in the economy has allowed the emergence of a middle class comprising nearly 400 million people, while generating great inequalities. Indeed, the Gini coefficient, which measures the inequality of income distribution on a scale of 0 to 1, puts China at 0.46 (2017 figure), fairly close to the most unequal countries, Brazil, South Africa and Botswana, at more than 0.5. France, like most Western European countries, does not exceed 0.3. The closer the result is to 0, the more equal the country is.
Prime Minister Li Keqiang came to remind us of this reality at a press conference on 28 May: “我们人均年收入是3万元人民币，但是有6亿人每个月的收入也就1000元，1000元在一个中等城市可能租房都困难…The average annual income is 30,000 yuan (2561/month), but for 600 million people it is 1,000 yuan per month. With 1,000 yuan (140 usd) a month, it can be difficult to rent an apartment in a medium-sized city… ” These inequalities, which are more painful in times of crisis, are multifaceted.
Cities and countryside
There is a big difference between urban and rural areas. The former generally benefits from a better social policy with more protection and social housing, for example for retirement. The average income in the cities is much higher, 42,359 yuan, than the average in rural areas, 16021 in 2019. A clarification nevertheless: the latter shows an increase over the last few years; in one year, for example, 9.6% and in the cities, 7.9%.
In a previous article, we noted that the average heritage in the cities is 3.175 million yuan (more than 400,000 euros); for Beijing it is nearly 9 million. Data on rural heritage does not exist, however, the average heritage is estimated to be at least three times lower. The nine regions (or cities) above this average are all in eastern China.
Eastern and inland side of the country
Indeed, the eastern façade of China is more advanced than the interior of the country. For the last ten years or so, the government has been trying to rebalance the regions, but the road is long. Some provinces need more infrastructure and railroads to open them up. The relief of certain regions with many mountains, such as Guizhou or Yunnan, is not an asset for greater openness.
The Chinese authorities are well aware that the economic upheaval following the pandemic is affecting the disadvantaged part of the population in particular. They have taken numerous subsidy measures, but they will not be able to replace the dynamism of the economy which has been undermined by the sharp drop in domestic and foreign demand and the problem of employment, particularly in the export sector. Li Keqiang stressed the efforts to be made for employment.
29 May 2020