China: Acute Reduction Of Poverty Along With A Substantial Increase In Income Inequality

Introduction

“To put it simply, the poor are getting poorer and the rich are getting richer. You don’t need a report to know that.” Said Zhou Xiaozheng, a sociology professor at Renmin University in Beijing. It isn’t news to people living in mainland China that while the upper class are living affluent lifestyles, the lower class are barely making it above the poverty line. This polarizing wealth gap that has developed in mainland China, is explained by Karl Marx’s conflict theory in this essay. The irony is that, although China is universally identified as communist region, the economy and the society are adapting into capitalist system.

Summary of the issue

Over the past two decades, China’s rapid economic growth has become the major drive of global economy. However, income inequality increased sharply along with the economic growth. (Whyte, 2014 )The Bloomberg Billionaires Index tracks 500 of the wealthiest individuals globally, and 38 of them are Chinese. (Bloomberg, 2018) Moreover, China’s economic growth was $23.12 trillion in 2017, which makes the largest economic growth in the world (AMADEO, 2019). With the numbers of billionaires from China, it is easy to forget that there are millions of people in China, that still live in poverty. According to the National Bureau of Statistics (NBS), there were 30.46 million rural people living below the national poverty line in 2017 (Xinhua, 2018).

During China’s greatest period of economic growth, the economic growth didn’t benefit all segments of the population equally. It drives a substantial increase of wealth inequality. Gini coefficient is a widely used statistical measure of income distribution across a population, ranging between zero to one. A reading of zero means everyone’s income was equal, while a reading of one means all the income is going to one person (KENTON, 2019). According to data released by the NBS, China’s Gini points increased slightly from 0.465 in 2016 to 0.467 in 2017. (Ceicdata, 2017) The World Bank considers a coefficient above 0.40 to represent severe income inequality. (Mitchell, 2016) Thus, it is not uncommon to see low income households living in shacks, at the same time upper class living in luxury apartments and houses.

Also, citizens in China face significant inequality in opportunities. The percentage of people enrolled in a tertiary education varies significantly depending on income levels of the provinces. The gap in tertiary education completion is huge across provinces. In the relatively remote region of Guangxi, 19% of the population enrolled in tertiary education, whereas Shanghai, China’s biggest and most developed metropolis, has 70% (Trivedi, 2018) Comparing rural to urban areas, the gap in tertiary education is wide.

Application of Conflict Theory

This essay uses conflict theory by Karl Marx to explain the wealth gap in China. Conflict theory focuses on the conflict between two primary classes: the bourgeoisie and the proletariat. The bourgeoisie represents the richest who hold the majority of the wealth and means of production, whereas the proletariat represents the working class or poor. Moreover, the social relationship between them is exploitative due to capitalism is all about maximizing profits. The bourgeoisie exploits the proletariat by keeping their wages as low was possible resulting in surplus value. The proletariat are being exploited because they get paid extremely poorly relative to the profit that their collective contribution generates. The exploitative relationship between the elite and the poor is the cause of wealth gap in China. For example, most of the low-income households live in the rural area and farming is about the only occupation available to them. The bourgeoisie keep what they pay the farmers for their labor as low as possible, then generate more than enough profit.

In addition, the uneven distribution of wealth, status and power is predicted to be maintained through generations by ideological coercion. (KENTON, 2019) The elite forces acceptance of the current conditions onto the working class by setting up social structures, such as laws and traditions, that only support their own dominance. As the elite perpetrated an unfair system that works to their advantage, capitalist economy continues to unfairly privilege them through generations. This is the reason why there is inequality in opportunities in China, the educational system that the elite built greatly benefit themselves because they have set a high threshold with the expensive tuition requirements. In this generation of information, the elite maintains their ranking starting with acquiring higher level of education and knowledge.

Critical Analysis of the Issue

Conflict theory accurately explains the wealth gap in China due to the transformation of China’s communist political system to capitalist economic system. Chinese Communist Party (CCP) founded by Mao is the ruling political party of China. Communism is a political system in which everyone is considered equal, so the means of production is publicly owned. (Rehman, 2013) In contrast, means of production are privately owned in a capitalist economic system. Moreover, the primary purpose of communism is to prevent the negative effect of capitalism: income inequality. (Rehman, 2013) However, the data and analysis above regarding the wealth gap prove that China has failed to do so. Therefore, China is a communist system politically, but a capitalist system economically. Even though the founder of China, Mao carefully followed the ideals of Karl Marx, ironically, China has now developed into what Karl Marx opposes the most: Capitalism, and it is thriving.

Despite the substantial increase in income inequality, the poor did have a significant increase in their incomes as well as living conditions. The bottom 10% incomes rose by 63% from 1980 to 2015. The poverty headcount ratio at $1.9 a day measured that the population in poverty decreased by 86% from 1980 to 2013. This indicates that China reduced the number of citizens living in poverty significantly, the most rapid reduction in history. (Sonali Jain-Chandra, 2018) Therefore, the lower income people are doing better than before and experiencing rising incomes. Also, access to secondary and higher-level education has increased rapidly since 1980. In 2017, approximately 8 million students graduated from Chinese universities, which is 10 times more than 2 decades ago. (Trivedi, 2018) While working-class people are offered more opportunities to climb social/economic ladder, the newly emerging inequality and stratification has affected their experience, which manifests the complexity in wealth gap issue in China.

Conclusion

The essay provides plenty of statistics indicating that China is experiencing an acuate reduction of poverty along with a substantial increase in income inequality. Wealth inequality not only causes the gap in status and power, but also results in a gap in educational opportunities available to various social classes. Also, although China is universally identified as a communist country, the economy and the society are adapting into a capitalist system. Moreover, the concepts of the bourgeoisie and the proletariat in capitalism from Marx’s conflict theory vividly depicts the reality of lower and upper class in China. The bourgeoisie have built social structures and institutions that work in their advantage, allowing them to maintain their ranking and to prevent lower class to climb the economic ladder.