Wealth, Power Inequality Hang Over Party Congress

In his address to the assembled 18th Party Congress on Thursday, president and Party general secretary Hu Jintao stressed the importance of battling corruption. A survey conducted by China Youth Daily last week, though, showed even greater anticipation for new steps to combat income inequality. From Lilian Lin at China Real Time Report:

Of 11,405 Chinese Internet users polled by the Social Survey Center of China Youth Daily last week, 66.6% said they thought the country was likely to pursue reforms related to income distribution in the future, the newspaper reported on Tuesday (in Chinese). Second on the list were reforms aimed at curbing corruption (57.8%), followed by reforms of the economic system (53.5%) in third.

[…] China “huge income disparity” was likewise the top choice when Internet users were asked to identify factors that could drag down the country’s development in the next decade, garnering votes from more than 75% of respondents.

Measuring income inequality is difficult in China, in part because rich Chinese families are loathe to reveal the true extent of their wealth. Even so, independent research suggests the income gap is expanding rapidly. Where the vast majority of Chinese families were on roughly equal financial footing prior the launch of economic reforms in the late 1970s, one academic survey of more than 8000 Chinese households conducted by Texas A&M professor Gan Li in 2011 found the country’s top 10% controlling 56% of income – a figure that makes China more equal than some African countries.

Victoria Ruan examined the scale and risks of China’s wealth gap at South China Morning Post:

Li Shi, a professor at Beijing Normal University who has become known as “Mr China Income Distribution” believes the widening wealth gap threatens economic growth.

He uses an internationally recognised ratio, the Gini coefficient, to measure income distribution – where a Gini coefficient of zero expresses perfect equality and a Gini coefficient of one expresses maximum inequality. The danger line where social turbulence can easily occur is 0.4.

When China began to reform the planned economy three decades ago, the gauge was at 0.3. It has since risen more than 50 per cent, hitting 0.48 back in 2007.

But while the gap continues to expand, and although the last ten years has been described as a “lost decade”, Tania Branigan wrote at The Guardian that the outgoing rulers have achieved a lot for China’s poor:

[Some] believe that for all the disappointments, the administration is leaving behind what could yet prove a significant political legacy: building the skeleton of a welfare state and attempting to put a shelf below those at the bottom of society.

“The government invested a lot of money in ordinary people’s living standards … China is starting to enter the ‘welfare China’ stage, although it is still at quite a low level,” noted Beijing-based scholar Deng Yuwen, in many ways an outspoken critic of the authorities’ record.

[…] While inequality has soared over the past decade – the gap between town and country has expanded, with rural dwellers enjoying less than a third of average urban incomes on official measures and perhaps as little as a fifth according to experts – research by Tony Saich of Harvard University found that satisfaction with the government had actually gone up between 2003 and 2011.

Strikingly, significant increases were seen among the poorest and the wealthiest. “When we started, those in the poorest categories were least satisfied with the local government,” Saich said. “That’s where I think things like the dibao [a subsidy for the poorest] and some kind of medical insurance have improved their view.”

Reuters’ James Pomfret also suggested that income equality may not be the most urgent problem facing China’s new rulers. He interviewed a rurual Guizhou resident whose local farmland is to be flooded by a new dam:

“We oppose it, but we also can’t oppose it. That’s how things are in China,” said Shen. “They eat the people and don’t even spit out the bones … those officials with wolf’s fangs.”

[…] As vast as the income disparity is between the rich and poor — Beijing hasn’t published official inequality statistics for over a decade, but the United Nations estimates the gap has grown steadily wider over the last decade — the maltreatment of ordinary Chinese citizens by officials may be the more dangerous flashpoint.

“The main challenge is not income inequality, it’s power inequality, and it’s much less easy to deal with,” said Martin Whyte, a Harvard University sociologist and author of a book on China and its disparities.

“Keeping this power inequality volcano dormant may be much more difficult than keeping the income inequality volcano under control, since to do so would require not simply new programs and financial resources, but fundamental political reforms.”

In order to narrow the perceived power gap, deputies at the 18th Party Congress include a contingent of 26 migrant workers, representing 1.14% of the total. From Xinhua:

To consolidate its power base, Dai Yanjun, a professor of the Party School of the CPC Central Committee, said the CPC must involve more members of industrial workers in major policymaking so that it can improve their standing and expand their influence.

[…] Kang Houming, a migrant worker deputy from southwest China’s city of Chongqing, said he hopes to see the government step up efforts to provide equal access to education and health care for migrant workers.

[…] The voices of Kang and other advocates have been heard by the government. It has rolled out a series of measures to improve conditions for migrant workers, helping them retrieve withheld wages and establishing a minimum wage mechanism.

The Hindu’s Ananth Krishnan interviewed Kang, who has also served as a delegate to the National People’s Congress:

Five years ago, the construction worker from Chongqing was chosen to represent the migrant labour force of the south-western municipality in the NPC. The move was largely a symbolic one — intended to show that the NPC, widely criticised even by Chinese scholars as a rubber-stamp legislature filled with political and business elites, was indeed a people’s congress.

Mr. Kang has spent the last five years fighting to push through legislation to bolster the rights of workers. He will step down in March when the current Parliament meets for one last time to complete a once-in-a-decade leadership transition, which will get under way on Thursday when the Communist Party chooses a new leadership.

[…] Mr. Kang looks back at his term with mixed emotions. Legislative efforts to push hukou reform have failed, with local governments wary of the added expense to social security. He counts as his most memorable achievement securing legislation to insure migrant workers for any disabilities that arise through work. “Before, migrant workers couldn’t transfer their social security insurance to other cities, but now they can continue their insurance,” Mr. Kang said.

Unsurprisingly, however, money and power more often go hand in hand. Kang cheerfully admits to being “probably the poorest” delegate, and those at the opposite end of the spectrum hold immense wealth: Bloomberg reported in February that the richest 70 delegates at the National People’s Congress had a combined wealth more than ten times greater than that of the top 660 officials in the U.S. government. More recently, exposés by Bloomberg and The New York Times have revealed some of the family wealth of incoming president Xi Jinping and departing prime minister Wen Jiabao, respectively.

Wen addressed the Times article by ordering an official probe into its claims, and two contenders for the next Politburo standing committee endorsed asset disclosure for senior officials on Friday. But some continue to argue that increased transparency would be premature. From South China Morning Post:

Cai Rang, a congress delegate and party secretary at the state-owned China Iron and Steel Research Institute Group, agrees that government and party officials should publicise their personal assets, but doesn’t think it’s feasible in the short term.

“In the long term, this should be the way to go. But in the short term, we don’t have enough psychological and technical preparation for it. The whole society, including the masses and the officials, is not ready yet [….]“