The paper "The Growing Gap between the Rich and Poor in China" is a perfect example of a macro and microeconomics literature review. Inequality with regard to distribution has become a major issue of concern that is worth giving a considerable public focus in China. The overall income of Citizens in China has continuously grown since the transformation and opening period commenced in the late 1970s. In the intervening time, the income gap stuck between residents in the rural and urban environments has continuously expanded, from a ratio of 1.8:1 in the mid1980s to a ratio of 3.2:1 in the year 2003.
In fact, computation by the World Bank, ‘ the Gini coefficient, a gauge of inequality innovated by an Italian statistician named Corrado Gini, was 0.26 and 0.38 in the 1980s and 1995 respectively for China. The same computation indicated that by the end of the 20th Century, inequality measurements had exceeded 0.4, thus giving a suggestion that the gap between the rich and the poor, as understood within the international contexts, had grown reasonably big. As Duggan (2013 notes, the Gini coefficient reached 0.61 in 2010 as indicated in the Survey and Research Centre for China Household Finance, signaling risk of disability. Contained in a report titled Analysis and Forecast of China Social Conditions 2004-2005, professionals employed in the Chinese Academy of Social Sciences recorded the widening gap in regard to income as the 2nd most serious of the 6 problems that residents of China are facing.
In the report, it is indicated that such widening income gaps have been noted in not only individual employees within the same profession but also those that are employed in different industries and regions within the country.
A detailed understanding of the causes of this continually expanding gap between the rich and the poor in China is therefore imperative in preventing any future occurrences of inequality. Causes of the Widening Gap between the Rich and Poor in China Weihua (2013) points out that China used to be an egalitarian society before it began its reforms and drive to open up its markets in the era of the 1970s. This could be a major cause of the widening gap because the Gini ratio at that time was constantly below 0.2.
The situation has therefore worsened due to a lack of reforms in the income distribution system. As Weihua (2013) notes, in the period of the 1980s, the top 10% of the Chinese population earned 7 times more than the bottom 10%. This illustrates a clear disparity in the distribution system as currently the top 10% of the Chinese population earn 25 times more than the bottom 10% population according to the reports of the Chinese Household Finance and China’ s National Bureau of Statistics of 2013.
It is therefore clear that in China, the income of the top ten percent population is rising at a rate that is very high while the incomes of the typical families barely budge. This trend could be a result of the recession in the constantly developing economy of China, thereby holding the disparity in incomes constant instead of alleviating the difference. A World Bank report in 2004 in China indicates that there is a big difference between towns and China’ s countryside which is a major cause of the widening gap between the rich and the poor.
Such differences led to the income gap that was experienced in the mid and late 1990s. This point fingers towards the differing distribution of resources in the rural and urban settlements as a major cause of the disparity. As such, the rural Chinese populations have difficulties accessing employment as most employing companies or institutions are based in urban areas. Secondly, there are notable differences between the rural areas in different regions in China. China underwent a process of liberalizing its trade-in Agricultural products in the early ages of 1990.
This came at a time when international and local or domestic prices for agricultural products were mutually going down. Consequently, the farmer’ s income in the provinces that were predominantly agricultural grew at a slow rate or even worse registered growths that were negative. These two factors have therefore led to the constantly widening gaps in terms of income between the rich in urban areas and the poor in rural areas, and similarly the difference between the incomes of farmers in rural areas that are located in different regions.
Duggan, J. (2013, Jan 12). Income Inequality on the Rise in China. Aljazeera.com. Retrieved September 9, 2013, from http://www.aljazeera.com/indepth/features/2012/12/2012122311167503363.html.
Liping, S. (2010, December 21). The Characteristics of China’s Growing Gap between Rich and Causes [Web log post]. Retrieved September 9, 2013, from http://onlooker9578.blogspot.com/2010/12/chinas-growing-gap-between-rich-and.html.
Mackinnon, M. (2013, January 21). Gap between China’s Rich and Poor Can’t be hidden in Chongqing. The Globe and Mail. Retrieved from http://www.theglobeandmail.com/news/world/the-china-diaries/gap-between-chinas-rich-and-poor-cant-be-hidden-in-chongqing/article7571019/.
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Roberts, D. (2011, January 27). China’s Growing Income Gap. Bloomberg Businessweek Magazine. Retrieved from http://www.businessweek.com/magazine/content/11_06/b4214013648109.htm.
The Economict. (2011, January 20). The Rich and the Rest: What to do (and not do) about Inequality. Economist.com. Retrieved http://www.economist.com/node/17959590.
Walker, A. (2013, January 15). China’s Great Growth Means Widening Gap between Rich and Poor. Itv. Retrieved September 09, 2013 from http://www.itv.com/news/2012-11-02/chinas-great-growth-means-widening-gap-between-rich-and-poor/.
Weihua, C. (2013, August 8). The Income Gap is China and US’ Common Domestic Foe. China Daily. Retrieved from http://usa.chinadaily.com.cn/epaper/2013-08/01/content_16861545.htm.
Xiang, Y. (2006, February 9). Narrowing Gap between Rich and Poor. Human Rights Magazine Retrieved September 9, 2013 from http://www.humanrights.cn/zt/magazine/20040200563104253.htm.