Nova workboard

a blog from young economists at Nova SBE

Inequity situation in China

Nowadays, at one hand, China’s society has emerged into and will retain in the M-shaped model. M-shaped Society is term proposed by Kenichi Ohmae, a Japanese economist and corporate strategist. It refers to a polarized society with the extreme rich and the extreme poor, that is to say, luxury goods and low-price products are the mainstreams, while the middle-price products will shrink more.

From a report on China Review News on June 26, 2009,(1) China’s M form social model with middle class’s collapse and elites alliance as well as circulation is becoming stereotyped. The monopoly and hereditary of elites’ positions lead to high concentration of wealth and keep invading limited scope for other classes development. Here are some data which reveals how big China’s high-income class is and how fast the growth rate of this class is. The growth rate of concentration of wealth toward the rich accelerates in 12.3% which is twice faster than the world average rate. According to an authority in China, 0.4% of whole population occupies nearly 70% of social welfare. It means that only deposit, funds and other legalized and non-clandestine financial asset are included and with exclusion of some off-the-books income. While in Japan, Australia and other developed countries, averagely, 5% of family household is in charge of 70% of national welfare; in America, between 56% and 59%. In china, till 2009, 51 thousand of people’s assets have exceeded 100 milllion dollars and among them people with political background account for large percent. Forbes China reports that China has become the most promising luxury good market.

On one hand, the rich is purchasing a luxurious chateau with 380 million RMB( more or less 48 million euros), a car with 43million RMB(5.5million euro), on the other hand, China is still having 0.254billion people living under the poverty line according to UN stand. Nearly 20% of whole China population’s daily expense is lower than the international poverty line. From the report issued by UN in 2005, China’s gini rate accelerated to 0.47. The inequity that incomes of people at the top have raised much faster than the rest, created social conflict between proper developers and unemployed migrant workers.

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Author: studentnovasbe

Master student in Nova Sbe

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