China?s most challenging problem lies with income distribution
?To the heavens and into the sea,? says China?s official press agency of the country?s landmark manual docking in space and its foray into the deepest depth of the seabed on the same day. Very few countries have achieved this. Ironically, China?s widening inequality between the haves and the have-nots also exemplifies a heaven-sea gap. On the one hand, it is no longer strange to see snaking queues of Chinese nationals lining up at a luxury outlet at Galeries Lafayette, Paris. On the other hand, poor peasants strive to eke out a living in the poorer areas. In a generation, China?s socialist experiment that rationalised a socio-economic ?square? (all sides or all people are equal) has transmuted into a triangular pyramid where the top is manned by the rich and the wide bottom by the common man?China?s aam aadmi.
China?s poignant shift from rhetoric to reality is epitomised by the infamous line mouthed by Ma Nuo, a young print model from Beijing who appeared on a Chinese version of the Indian television reality show Swayamwar, called If You Are The One. Ma, a pretty face, proclaimed to a suitor on the reality show, ?I?d rather cry in a BMW car than laugh on the backseat of a bicycle,? much to the horror of an older generation who even ate leather to survive in the hard, revolutionary times.
China?s triangular socio-economic pyramid is stratified. At the top is an upper class of 100-150 million, which includes the Party cadre and the new bourgeoisie. Below them are about 200 million urban and state enterprise workers. At the bottom are the ?second class citizens? comprising 400 million peasants and workers (many of whom are now becoming the ?Three Nos??no land, no job, no income) plus 250 million floating migrants (some of whom are referred to as the ?ant tribes??a term, coined by Beijing sociologist Lian Si, referring to China?s educated but lowly-paid youth who live stacked in dormitories lined with bunk beds in big cities). Between them is the emerging middle classes that numbers about 100-250 million, depending on who you ask. Whatever the numbers, it is quite apparent that the bottom is heavy.
China?s Gini coefficient (a measure of inequality) has not been made public since 2000, with officials citing inadequate data, leading the China Digital Times to take a swipe that China is ?keeping the gini in a bottle.? Academics such as economist Li Shi, well known for studies on income distribution, inequality and poverty, says that China?s Gini co-efficient has worsened from below 0.3 a quarter century ago to near 0.5 today, overtaking the warning level of 0.4. According to Li, the income of the top 10% of the richest Chinese was 23 times that of the bottom 10% in the country in 2007, cutting a sharp contrast to 1998 when this ratio was only 7.3 times. As Li Peilin of the Chinese Academy of Social Sciences says, ?China?s most challenging problem lies with income distribution.?
What is causing resentment is that an increasing number of the upper class are the children of Party cadre or officials. Many suggest that the Party (cadres, kith and kin) has been the main beneficiaries of the economic boom. Some of China?s ?red? third generation (offspring of ?red? leaders or Party cadre) have been prominently in the limelight. While most are not into the family ?business? (politics) directly, in contrast to the offspring of ?leaders? in India, they have nevertheless leveraged their lineage to get plum commercial benefits. Wan Baobao, granddaughter of a former Chairman of National Peoples Congress is the head of Bao Bao Wan Fine Jewellery, and leading fashion designer Ye Mingzi is the granddaughter of a Marshal.
NYT recently alluded to this more directly and suggested that children of Party cadre are the ones profiting from China?s boom, with one of the biggest investments in recent times by Dreamworks Animation ($330 million) to create an animation studio in Shanghai being partnered by the son of ex-President Jiang Zemin. China?s new rich like Jeffrey Zeng (Kaixin Investments), Liu Lefei (Citic Private Equity Fund) and Alvin Jiang (Boyu Capital) are all offsprings of the Party leaders. And there are more?including the kith and kith of the current generation of Chinese leaders.
Children of Party cadre who abuse power have also received attention. China?s Hebei case (2010) somewhat mirrored Delhi?s BMW case (1999). In the Hebei province bordering Beijing municipality, Li Qiming, the son of Li Gang, the deputy police chief of Baoding city, drove over a young college student who later succumbed to injuries. When stopped by the security guards, Li Qiming retorted, ?My father is Li Gang.? This phrase became a bitter treatise, a social satire of sorts, of the new times. A China that had engaged in bitter purges aimed at the bourgeoisie for a decade during the Cultural Revolution (1969-1979) had come full circle.
Other children of Party cadre such as Bo Guagua, the son of the high-profile purged leader of Chongqing municipality Bo Xilai, received much coverage including allegations of driving a Ferrari. However, it appears that Bo Guagua is not the only one driving a Ferrari. A Ferrari crash in Singapore in May this year led to a lot of speculation regarding the deceased Chinese national driving it. The Ferrari crashed into a taxi, killing the driver, taxi driver and passenger. The Straits Times speculated that the deceased Ferrari driver was the son of Ma Kai, Secretary General of the State Council, China.
Sinologist Victor Shih opines, ?You have got the children of current officials, the children of previous officials, the children of local officials, central officials, military officials, police officials. We are talking of hundreds of thousands of people out there?all trying to use their connections to make money.? What is worrying and problematic is the strong overlap between the rich and the children of Party cadre that makes investigations a case of the Party chasing its own tail.
The legitimacy and therefore the infallibility of the Party rests squarely on two pillars: delivering economic growth and maintaining credibility. So far, the Party has steered the country well on the economic fast track?though this is starting to come under question of late. But on the honesty crucible, the Party is more and more failing in keeping its head high. The juxtaposition of widening inequalities and fractured legitimacy is damaging to the long-term future of the Party.
The author is a Singapore-based sinologist, currently a visiting fellow at the Institute of Chinese Studies, Delhi. Views are personal