EVER GROWING social inequality and the persistance of endemic poverty in China are increasingly the most glaring anomalies in the country’s professed road to what Deng Xiaoping called “Socialism with Chinese characteristics”.
They have also contributed in recent years to growing social and political unrest, focusing often on the privileged children of the regime, and to industrial disputes that have alarmed the leadership of the Communist Party whose leader Wen Jiaobao last month promised to eliminate poverty by 2020.
In response to such increasing pressures the party has endorsed a series of reforms of the tax and wages system and social programmes to share more evenly the benefits of the spectacular growth that has made China a production line for billionaires with 115, second in the world but catching up on the US’s 412.
The number of Chinese individuals with net worth of at least 10 million yuan (€1.05 million) will by the end of 2011 have doubled in three years to 590,000, accordiing to a survey conducted by global consultants Bain Co and China Merchants Bank. And China’s wealthiest this year alone can expect their combined assets of 18 trillion yuan (€1.9 trillion) to rise by a fifth.
By 2009 the richest 10 per cent of Chinese controlled some 45 per cent of the country’s wealth, the poorest, just 1.4 per cent. Now, changes in the official poverty level, raising it from €0.34 a day to €0.43, will triple the still massively understated numbers of “extreme poor” to 100 million. By the UN’s measure, twice that level, some 245 million Chinese remain in extreme poverty.
The tax changes announced by the Chinese government last week will help, lifting some 50 million of the lowest paid out of the income tax net altogether by raising the tax threshold 50 per cent to €315 a month. The result will be to leave 94 per cent of taxpayers paying at 10 per cent or less (although the income tax take still represents only a twentieth of state revenue).
In response in part also to labour market shortages the government has made clear it will raise wages by 15 per cent a year, effectively to see them double by 2015. It has also committed itself to build 35 million low budget homes and to raise the minimum wage. But, given the relatively modest nature of the proposals it is hard to see such measures being sufficient to buy long-term peace.
Socialism with capitalist characteristics, it seems. Karl Marx’s contradictions live on.