Increasing Inequality in China

Increasing Inequality in China

China, a prospering global giant which is set to start the journey of becoming the world¡¯s biggest economy by overtaking the U.S., continues to move forward. However, there are some problems for them to solve in an attempt to stand as a true superpower of the world.

One of the biggest problems that the experts point out is their increasing inequality. ¡°China may be the second largest economy in terms of GDP, but that makes the fact that China¡¯s per capita income is 10 times smaller than Japan and the U.S.,¡± Kevin Gallagher, a professor of International Relations at Boston University said.

China¡¯s Gross Domestic Product (GDP) in 2009 stood at $4.9 trillion but the per capita GDP was just $3,700 which is far behind developed countries. ¡°What¡¯s more, China is still home to one hundred million poor people and it is fast becoming one of the most unequal societies in the world,¡± Gallagher added.

Gallagher said that in 1978, China¡¯s Gini coefficient was 0.18 and is now approaching 0.50 and the figure is similar to the most unequal places in the world like Brazil and Mexico.

The Gini coefficient is a measure of the inequality of distribution, a value of 0 expressing total equality and a value of 1 maximal inequality.

The biggest reason for the inequality is the urban-rural gap. The Chinese government has been focusing its resources in developing cities in the east coast regions such as Shanghai and Beijing. So in the western part of the land, many regions are still not developed and people are still struggling from poverty.

Though GDP may not be everything for China, the Chinese people can also benefit from the overall growth of the economy. ¡°China¡¯s economic status will give China tremendous bargaining power at the WTO and elsewhere. And China will demand more respect amongst the global business environment,¡± said Ted Sun, an international professor and expert based in the U.S.