Prime Minister Li Keqiang’s remarks about the 600 million Chinese with an average income of 1000 yuan ($140) have provoked many reactions and questions in the Chinese media, “Where are these 600 million? How can such an economic powerhouse end up with more than 40% of the population with such an income? The GDP per capita exceeds 10,000 USD, where does the money go? ». It’s true that the official media are more focused on the benefits of growth and that it’s easy to forget a reality that we don’t see much of in the big cities. Hence the shock of reality!
To identify the problem, one must turn to the China Institute for Income Distribution at Peking Normal University (中国收入分配研究院). First of all, it should be pointed out that this is net income after the deduction of possible social security contributions and taxes. What do we find out?
Of the 600 million Chinese with incomes below 1090 yuan, 75.6% come from rural areas, 36.2% from the centre, and 34.8% from the west. Not surprisingly, we had already mentioned here the inequalities between the urban and rural worlds and the eastern facade with the rest of the country.
19.8% are single. The average age is 38.5 years.
The average length of schooling is 9.5 years; their level of education is low. 9.6% are illiterate.
37.5% are not part of the labour force (term employé非劳动力, i.e., pensioners and those not of working age), 18% are sole proprietors, and 37.4% are employees.
5.6 million have no income.
Two hundred twenty million have less than 500 yuan, 420 million have less than 800 and 550 million have less than 1000.
Between 1090 and 2000 yuan, there are 364 million people. Only 700,000 people earn more than 20,000 yuan per month or 0.05% of the population. The following table gives details of the monthly income
Distribution of monthly income in China in 2019, source Caixin
Of course, when we look at these numbers, we have to put them in context. For example, GDP per capita of $10,000 is well below the estimated GDP at purchasing power parity of $16,000. But it is clear that a couple with 2,000 yuan in a big city has difficulty finding housing in Beijing or Shanghai, for example. Moreover, the largest cities are experiencing the same phenomenon as the world’s major capitals, with low income earners having to live on the outskirts even if it means putting in hours of transport every day to get to work.
Li Keqiang is the Prime Minister; he is “on deck” and has to find solutions. Even if his speech sometimes aims to “stand out” from his president, he approaches certain subjects more realistically. He spoke out against some local officials who should not hide the figures on the epidemic, and this time he does not want to hide the dangers of the consequences of the outbreak, the most disadvantaged will be the most affected.
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27 July 2020