Addressing China's Wealth Disparity: Causes, Effects, Solutions

Summary:

In this report, the focus is on China's struggle to combat the widening wealth disparity between the rich and poor, leading to growing social and economic inequality. The rich continue to accumulate wealth while the majority face increasing poverty. The report will first outline the various reasons behind this issue, followed by an examination of its impact on economic coordination and societal progress. Additionally, potential solutions to address the escalating rich-poor gap will be explored.

1. Introduction:

The disparity in personal wealth within society is evident through the gap between the affluent and the impoverished, particularly in terms of income, wealth, and standard of living.

China is currently facing this significant imbalance. According to estimates provided by the Chinese government, the number of Chinese millionaires with assets exceeding 10 million renminbi rose from 825,000 to 875,000 between 2008 and 2009. Meanwhile, the wealthy elite at the pinnacle of the wealth hierarchy are rapidly expanding, while the average peasant at the base earns less than US$5,000 annually (Sherry Lee, 2010).

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This issue carries wide-ranging implications.

2. The growing wealth disparity in China is attributed to the irrational economic policies.

During the course of social development, our country implemented an unjust economic policy that prioritized certain areas and individuals to become wealthy first, as encouraged by the third plenary session of the fourteen. This policy led to a continuous rise in the Gini coefficient. Chinese officials last disclosed a Gini coefficient in 2000, stating that it was 0.412. A report from the NBS in 2011 mentioned that the Gini coefficient for that year was slightly higher than in 2010, but did not specify the exact figures for either year (Fang Xuyan and Lea Yu 2012).

2.2 Natural resources are not evenly distributed.

One reason for the wealth gap between the rich and the poor is the unequal distribution of natural resources in China. For example, while Shanxi and Inner Mongolia have a majority of coal deposits totaling over 760 billion tons, only 1.4% is found in nine southern provinces. Similarly, most proven oil reserves are located in northeast China, northwest China, and coastal areas of the north. Additionally, Sichuan and Shanxi hold 70% of natural gas deposits. Water resources also vary greatly with southern China having 82.3% compared to 17.7% in the north. In addition to this resource disparity, deficiencies in social security systems and education further contribute to income inequality.

3. The effects of uneven distribution of wealth in China

3.1 Impede the growth of economic collaboration

The poverty gap is too large to hinder the development of economic co-ordination. The overall income level in China is low and has had an impact on domestic demand. The majority of wealth goes into the pockets of the rich, while only a small amount goes to the poor. Resident incomes have been increasing slowly, but the consumption standards for the wealthy have not increased significantly. Unable to meet the needs of the rich consumer market in China, many choose to consume abroad, with the remaining money transformed into deposits. However, low-income individuals lack purchasing power, leading to a decrease in average consumption in society. Economic depression will result in an increase in the unemployment rate and further aggravate the wealth gap between the rich and poor.

Harming social stability can hinder progress and create obstacles for the community.

Additionally, the poverty gap can result in instability within society and even lead to the division of the country according to the China Academic Journal. Individuals living in poverty often experience hunger, which impacts their mental state and can drive them to commit extreme actions such as theft, robbery, or murder. Those with low incomes may feel inferior and disconnected from society, leading to imbalances in their mental well-being. This can manifest as animosity and resentment towards the wealthy, potentially resulting in a rise in criminal behavior. The widening income gap erodes trust in the government and hinders effective management.

4. To address the widening wealth disparity, focus on improving education.

It is essential for the progress and development of society to have good social order and social management. To reduce the wealth gap, focusing on improving education and labor quality is crucial (PEOPLE POLITICS 2012). Countries should enhance teacher treatment and invest more in basic education to ensure all children receive compulsory education. When equipped with systemic education knowledge, individuals gain competitiveness in the market. Additionally, economic growth and increased employment opportunities should be prioritized. This will not only address new labor employment issues, but also provide suitable re-employment options for the unemployed workforce.

Addressing the gap between urban and rural areas is crucial in ensuring equitable access to resources and opportunities for all individuals, regardless of their geographical location.

One alternative is to improve the social security system and reduce the income gap between urban and rural regions.

In February 2004, the State Council announced a set of policies designed to improve the living conditions of farmers. These policies are centered around bolstering agricultural production in grain-producing regions to raise farmers' incomes. The support provided includes giving incentives to farmers, improving production techniques and soil quality, and increasing government funding for agriculture. By enacting these measures, it is anticipated that farmers' incomes will rise substantially and there will be a transformation in the agricultural production system due to enhancements in output variety, management practices, and technological advancements.

Assist farmers in moving to urban areas by reducing levies, providing training for incoming farmers, and educating their children. Establish market mechanisms for grain distribution, promote farm products, and reform rural tax systems. (Gregory C Chow 8/9/06)

5. In conclusion, China is facing a growing gap between the wealthy and the poor, which requires urgent attention from the government. The main focus should be on enhancing the national educational level and economic development. Additionally, efforts should be made to strengthen the social security system and narrow the income disparity between urban and rural areas.