A richer China grapples with widening wealth gap

Beijing(China)—Every year the village of Beishankou in central China holds a ceremony to honor those who have contributed to its prosperity.
This year seven of the ten people receiving the traditional scarlet flower awards are from the poorest in the village. “The poor villagers who have made more money than in the previous year are always seated in the front to receive the awards,” says Zhao Taixuan, head of the Beishankou branch of the Communist Party of China (CPC), which has become one of the richest villages in Henan Province by producing fire-proof materials.
“It’s more difficult for a poor man to earn 100 yuan (12.5 U.S. dollars) than it is for some to earn 10,000,” Zhao explained. In Beishankou, where per capita net income was 2.5 times more than the national rural average last year, almost a quarter of its households were below the poverty line in 1999. As the economy developed, the wealth gap widened unexpectedly among the villagers, said Zhao.
Beishankou is not alone with a yawning income gap in an ever richer China. Growing at a double-digit speed to become the world’s fourth largest economy, the country has been grappling with the disparity between the haves and have-nots, which has widened dramatically over the past 20 years. The richest 10 percent of the Chinese families now own more than 40 percent of all private assets, while the poorest 10 percent share less than two percent of the total wealth.
The country’s Gini Coefficient, a measure of wealth gap, is estimated to exceed 0.4, a level that could endanger economic and social stability. The government has made curbing the wealth gap a priority in building a harmonious society by 2020, with moves to improve the lives of low-income groups, expand the middle-income group and limit excessively high earnings. For the impoverished in Beishankou, that meant 300,000 yuan channeled from the village revenues each year to support their agricultural production or other businesses, plus another two million yuan for public undertakings and farming sidelines.
With the help, more than 200 households in the village have escaped poverty by growing mushrooms, said Zhao. But the biggest relief for all Chinese farmers was the complete removal of agricultural taxes in January, which eased their burden by nearly 50 billion yuan each year. Subsidies to crop growers totaled 14.2 billion yuan this year, one billion more than last year, while other allowances for buying diesel, chemical fertilizer, seed and farm machinery continued to rise.
Paper-thin profits of growing crops have prompted about 120 million farmers to seek better-paid jobs in cities. The government-aided Sunshine Project offered job training to an estimated 3.5 million rural migrant laborers this year. “China’s wealth gap mainly results from the inequality between the cities and the countryside,” said Mao Yushi, one of China’s leading economists. In 2005, the per capita income of urban citizens was 3.22 times that of rural residents in China.

—The Daily Mail-China Daily news exchange item