Thursday, June 07, 2012

chinese crackers

China has the second largest GDP in the world now. But in per capita terms, its is 95th in world rankings. The per capita GDP is still around $4000 to $5000 (depending on how you calculate and what population figures you use).

For the past 11 years China has not released an important index of the economy called the Gini coefficient which gives a measure of inequality. If the Gini is 0 there is perfect equality, if it is 1 there is complete inequality. Usually the measure is around 0.3 in developing countries. Nordic countries have lowest Gini coefficient of 0.2, meaning their societies have the least inequality.

In 2000, China's Gini was officially reported at 0.412, already on the higher side. According to World Bank estimates, it is steadily increasing and stood at 0.47 in 2009. According to state run China Daily, the richest 10% of China's population earns 23 times more than the poorest 10%. In 1988, this rich poor gap was 7 times. The number of millionaires in China grew to 1.4 million last year, up 16% year-onyear, according to a report by US based think tank Boston Consulting Group. On the other hand, average income in rural areas is just 5919 yuan or about $888 per year. Even in urban areas, migrants workers tend to get two thirds the wage of an urban registered worker. Migrant workers also worked longer hours and got less social security benefits.

Physical evidence of vast inequality is obvious in China's cities. Malls, skyscrapers, luxury brands (China is now the world's second largest luxury brand market, after Japan), protected mansions and limousines are everywhere but you don't have to go out of the way to find beggars at traffic lights or outside tourist hotspots. In cities, people can be seen selling cigarettes or small novelties on pavements, or collecting plastic bottles from garbage bins in airports and department stores.

 "If low-income families cannot afford a decent standard of living, rich families will not enjoy any sense of security. That is a problem for the world, not just China," Yang Yiyong, director of the Social Development Research Institute said.

The government are planning a package of measures to address growing inequality, according to media reports in China. The guideline is "for the government to give up a little tax revenue, for companies to give up a little profit and for rich people to give up a little interest."

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