China is like that! No, I don’t think it is!

Dichotomy, rich or poor?

An article in the South China Morning Post entitled, “Is China rich or poor? The nation’s wealth debate muddied by conflicting government data” evokes the debate sparked by two types of data released this month. I’m always quite surprised when you look at China with.a mindset full of dichotomies. The country is too diverse and complex to fit into one category or the other. Thinking about a question in opposite terms? Rich or poor, does not allow us to approach the Chinese problem from the most judicious angle. Moreover, this remark can be applied to areas other than China’s poverty/wealth.

Contradictions?

The People’s Bank had released a study showing that the average household’s wealth in Chinese cities was 3.175 million yuan (450,000 USD), see the May 5 article. The study was quickly removed from the institution’s public account, following reactions from families who could not identify with these figures.  On the other hand, Prime Minister Li Keqiang, on 28 May, recalled that 600 million people had only 1000 yuan (140 USD) of monthly income. 
With a quick judgment, one could find these figures contradictory. One forgets that the meteoric growth has enriched a tiny part of the population at the top of the economy and created inequalities that are difficult to avoid. The distribution of wealth is not a new problem. Already, Wen Jiabao, head of government in the first decade of the 21st century, was worried that China was falling into the trap of Latin American economies, which were unable to create a genuine middle class. China does not rank well on the Gini coefficient, which measures inequality, see the May 29 article.

rich and poor


Inequalities are growing

Shanghai economist Li Xunlei, 李迅雷, referring to Li Keqiang’s comments, noted yesterday on his Weibo account that inequality continues to grow: “Income is divided into 5 groups, the low and middle-income groups comprise 560 million people with an average income of 965 yuan. From 2016 to 2019, the high income group recorded an income growth of 29% while the middle income group recorded an increase of 19%, which means that income differences are increasing…”.
Part of the population obviously lives in affluence, including the 400 million people who are part of the middle class and among those who have an average wealth of 3.175 million yuan, 9 million for Beijing, and own 1.5 apartments per couple. Soaring property prices have of course created this relative “wealth”.  It does not belong, or hardly belongs, to the category of the billion Chinese, who have never been on a plane (according to Li Xunlei).

I don’t think it’s easy to answer the question of “rich or poor”. It is more interesting to show the structure of Chinese society, the puzzle that composes it. At best, one could say that the country is moving towards the constitution of a true middle class, which today represents only one third of the population. How long will it take for it to comprise 60% of the population? Moreover, when approaching China, it is vital not to focus too much on the great generalities that have a basis in truth, but to remain aware that the great variety of the country and the mix of its population make it both complex and diverse. What makes China exciting! It is better not to take cities like Shanghai or Beijing or Canton, for the most representative places of China.

An article on the differences between Guangzhou, Shanghai and Beijing and business behavior by Master Wu!

31 May 2020

Leave a Reply