Ways of getting rich larger concern than inequality

By Zhang Yi Source:Global Times Published: 2014-7-28 0:28:02

According to a study by Peking University revealed on Friday, the top 1 percent of Chinese households own one-third of the nation's wealth, while the bottom 25 percent own just one hundredth. The seemingly massive inequality has triggered hot debate on China's social media, some of which even began to doubt the achievements of China's reform and opening-up in the past three decades.

Wealth inequality has been a widespread source of anger among the Chinese public and of significant concern for the Chinese government. The public points their fingers at the abnormal means that some have used to gain profits and the unfair treatment they have to endure, and the government is worried that public anger may lead to social instability.

The pace and scale of China's economic development have no historical precedent.

Chinese GDP has grown about 10 percent annually for more than 30 years, the seeds of which were planted back in 1978 when the CPC introduced the reform and opening-up policy. China's economic miracle has left the world in awe and at the same time, Chinese people's livelihoods have greatly improved.

As Ludwig von Mises, an Austrian School economist and classical liberal of the 20th century, noted, inequality of wealth and incomes is an essential feature of the market economy. As China's moves toward a market economy become more complete, the associated wealth inequality has grown larger.

The Gini coefficient, an indicator of inequality with 0 representing total equality and 1 representing total inequality, has stayed between 0.47 and 0.49 during the past decade in China, higher than the warning level of 0.4 set by the United Nations.

Indeed, wealth inequality is a common phenomenon across the world. Human civilization has witnessed the coexistence of nobles and civilians, moneybags and beggars, the rich and the poor.

Yet what most Chinese people feel uneasy about is the way the top 1 percent of wealth holders have accumulated their wealth, be they property tycoons exploiting advantages from national policies or government officials using corrupt means. That is why the government has been emphasizing that it is carrying out comprehensive reforms in all sectors, and the anti-corruption campaign by the Chinese authorities is gathering steam day by day.

It is pertinent to the Chinese authorities to be sensitive to economic inequality getting translated into political inequality, which in turn creates economic inequality, as Nobel laureate Joseph Stiglitz believes. As for the Chinese public, they should  lend a helping hand to the country's reform measures.



Posted in: Observer

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