---
http://www.asiasentinel.com/index.php?option=com_content&task=view&id=2197&Itemid=206
China's Ignored Rural Poor
Written by Willy Lam
Tuesday, 15 December 2009
The Communist Party seeks to help its deprived workers and farmers
It is a mark of how far the Chinese Communist Party has strayed from its
socialist principles that the Politburo waited until last week before stating
the obvious: that Beijing must do more to augment the income of its
long-deprived workers and farmers, who form the great majority of the country's
1.3 billion citizens.
The just-concluded Central Economic Conference announced that the
government would "boost the degree of the adjustment of the distribution of
national income, so as to increase the spending ability of [ordinary]
residents, particularly the low-income masses."
Well, better late than never. This is despite the fact that the party
leadership is in many ways driven by force of circumstances - rather than
altruism or residual Marxist sentiments - to attend to the plight of the
disadvantaged sectors.
Given the dicey prospects of exports to the US and Europe, Beijing has
since the global financial crisis relied mainly on government investment to
attain its much-ballyhooed growth rate of 8 percent this year. The great bulk
of the 4 trillion yuan stimulus package unveiled by Premier Wen Jiabao in
November last year has gone into infrastructure building. However, as the
chairman of the state-controlled Everbright Group, Tang Shuangning pointed out,
a 1 percent increase in investment results in a mere 0.2 percent expansion in
GDP, while a 1 percent boost in consumer spending can engender an 0.8 percent
GDP growth. The problem, of course, is how to ensure that Chinese will have
more money to spend.
An article in the official Nanfang Daily admitted that "contradictions in
income distribution in China are relatively outstanding." "Disparity between
urban and rural income levels is too big," the daily said. The party mouthpiece
noted that while the bulk of the wealth created in the past 20 years of reform
has gone to state coffers as well as big business groups, the proportion
accruing to workers and peasants is disproportionately small. The income of
workers and farmers as a proportion of GDP fell to 41.4 percent in 2006 - the
last year when such statistics are available - from 53 percent in the
mid-1990s.
Yet revenue flowing into central coffers rose from 1.64 trillion yuan in
2001 to more than 6.13 trillion yuan last year. Apart from the central
party-and-government authorities, the country's 140 state-held conglomerates,
which include monopolies in sectors ranging from oil and gas to banking and
telecommunications, have been the major beneficiaries of the "Chinese economic
miracle." The assets and sales of these behemoths grew annually by an average
of respectively 1.5 trillion yuan and 1.3 trillion yuan for the five years
ending 2008.
It is little wonder that discrepancies between the nouveau riche "new
classes" of cadres and businessmen on the one hand, and the traditional
proletariat on the other, have been yawning ever wider. According to Renmin
University economist Zeng Xiangquan, the richest 10 percent of the population
control 45 per cent of the country's wealth. Zeng notes that China's Gini
Coefficient - a measurement of a country's rich-poor divide - rose from 0.16 in
the 1980s to 0.47 in 2007.
Western social scientists, however, reckon that the country's Gini
Coefficient has already breached the 0.5 mark, which is an indication that the
country is ripe for social upheaval. Indeed, internal reference materials
distributed among cadres have indicated that more than 100,000 cases of "mass
incidents" - a euphemism for riots and disturbances - erupted last year.
So far, however, the party-and-state apparatus has yet to spell out
concrete steps to raise the pay levels of workers, migrant laborers as well as
farmers. Measures proposed by economists and social-welfare experts in Beijing
and Shanghai have included: raising the minimum wage in the cities; increasing
the levels of dibao, a subsistence-level payout for unemployable urbanites as
well as rural residents; ensuring that the pay of migrant laborers (who do not
have permanent residence in cities and are regarded as second-class citizens)
be on par with those of urban workers; and granting more exemptions to
tax-payers especially among the country's fast-growing middle and professional
classes.
In theory and practice, the Wen government is in a position to do all
these - and then some. While the US and Japan, the world's first and second
largest economies, are running huge public debts, China's central treasury is
flush with cash.
Earlier this year, the National People's Congress, China's parliament,
approved total government expenditure of 7.62 trillion yuan for 2009. As of the
end of November, only 5.62 billion yuan had been spent. This means that the
central government is in the enviable position of having 2 trillion yuan's
worth of extra cash that it must splash out in December.
As with most problems in China, the underlying issue is political rather
than economic. Sixty years after the establishment of the People's Republic,
the party has morphed into a gargantuan nexus of vested interests that are
closely allied with business conglomerates that are often run by the spouses or
children of senior cadres.
Just as the Communist Party has jealously guarded its "perennial ruling
party" status and its near-total monopoly on political power, it is unwilling
to share wealth with the masses. Despite its "putting people first" mantra, the
administration of President Hu Jintao and Premier Wen has followed a
conservative trickle-down policy in income distribution as well as extending
social-security benefits to the countryside, which is home to 65 percent of
Chinese.
Given that ordinary workers and peasants have no representation in top
bodies such as the Central Committee and Politburo, the prospects are not high
that promises made at the Central Economic Conference last week will be
translated into action any time soon.
--- End
ppiindia
