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Chinese scholars warn on wealth gap Original Source Link: (May no longer be active)
http://www.forbes.com/technology/ebusiness/feeds/ap/2005/08/22/ap2187608.htmlhttp://www.forbes.com/technology/ebusiness/feeds/ap/2005/08/22/ap2187608.html
Associated Press
Chinese Scholars Warn on Wealth Gap
08.22.2005, 09:44 AM
Chinese scholars have warned that rising income disparities - especially between the nation's booming cities and vast, impoverished countryside - will likely undermine social stability by the end of the decade, the official China Daily newspaper reported Monday.
Annual urban incomes that are due to surpass 10,000 yuan ($1,200) on average are growing twice as fast as those in the countryside, the China Daily said, citing a report commissioned by the Labor and Social Services Ministry.
Rural incomes linger at around 3,000 yuan ($370) per year.
The income gap between rich and poor in the countryside is also widening, along with that between laid-off factory workers and the new urban upper class, the report said.
"Income disparity in China is in the yellow light area now," the paper said, citing a report by the team of scholars, headed by Su Hainan, president of the ministry's Income Research Institute.
"We are going to hit the red light scenario after 2010 if there are no effective solutions in the next few years," it said. The team uses blue, green, yellow and red light indicators to track income disparity trends, with red being most serious.
Economic reforms launched in the late 1970s have produced vast economic development, attracting billions of dollars in foreign investment and allowing Chinese to open businesses to exploit markets at home and abroad.
But reforms have also largely ended cradle-to-grave social support, forcing Chinese to pay far more for health care, education and other basic services. Millions have also slipped into poverty after being laid off from moribund state enterprises and rural incomes have largely stagnated as wealth fails to trickle down into the countryside.
The wealth gap is most serious in rural China, where average farmers earn 3.39 times as much as those listed as the lowest earners. That disparity was just 2.45 in 1992, the report said. The government said earlier this year that income gaps were expected to continue widening over the next decade.
China's richest 10 percent had disposable incomes 11.8 times greater than those of the poorest 10 percent, according to the earlier report. Disposable income is salary minus government levies and taxes. China's wealthiest 10 percent held 45 percent of the country's wealth while the poorest 10 percent held just 1.4 percent by the end of the first quarter of 2005, the earlier report said.
Neither report speculated on what form social instability could take, but China has been hit by a series of violent protests by farmers angry over environmental degradation and land seizures. Conflicts over scarcities of water and other basic resources are also spreading and experts warn China has only a few years left to prevent a worsening AIDS crisis from turning into a full-blown national epidemic.
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