A friend received the call which always comes too soon. Somewhere in the Chinese countryside her 70 year old dad was dying. She got a train to the county town where he was being cared for in a rural hospital. Some type of pneumonia, perhaps, as he had to breathe through a tube. His unspecified condition didn’t sound too serious but staying in the hospital cost several hundred yuan a day, which he felt as a heavy burden for their family.
The doctors had told him to rest but wary of the costs, he stopped cooperating with hospital treatment, or eating hospital food, and a few days after her visit, to my friend’s relief, he was back home.
Several weeks later, though, after another call to say her father had passed away, her family had to borrow thousands of yuan to spend on the mourners and musicians, the paper money and mansions, which are part of the iconography of death in rural China.
She said that in those final weeks before his death her father had got out of bed just once, hobbling a few steps to a dresser and pulling open a drawer which contained a few sundry items like handkerchiefs, trinkets, and small banknotes. These were the sum of his personal possessions after 70 years on the planet.
He sorted out this small estate in a few minutes, dividing the trinkets, banknotes and handerchiefs among his grandchildren. His worldly affairs now in order, this gentle man got quietly back into bed and a few days later slipped away.
I thought of the contents of that drawer as I read recently that according to a study by the Southwest University of Finance and Economics in Chengdu, which modelled unreported income, China’s Gini coefficient has reached .61, higher even than the United States, and indeed second only to Lesotho. Meanwhile China’s richest one percent now control one-third of the country’s wealth.
A 2017 study by Thomas Piketty about inequality in China also found Chinese income inequality to be far greater than official estimates. According to the study, the top 10% income share rose from 27% to 41% of national income between 1978 and 2015, while the bottom 50% share dropped from 27% to 15%; the report said in view of likely under-reporting by higher earners these estimates should be considered lower-bounds.
Should we regard this such extreme inequality as just a necessary corollary to modernisation, the inevitable price for the benefits delivered in terms of poverty alleviation? The form of China’s modernisation, though, is not exogenous but the results of decisions, one of which was Deng Xiaoping’s call in 1992 during his famous southern tour to ‘let some people get rich first’.
As Bao Tong wrote in the New York Times, Deng never clearly specified who was to get rich first, but it turned out that it was mainly the party insiders and their friends, who for the first twenty years of the post-1992 era were the quiet beneficiaries of a vast programme of asset stripping and privatization on a scale comparable to Yeltsin’s Russia.
Most systematic, though, were the effects of China’s two tiered residential ’hukou’ permit system with restrictions on freedom of movements and differential rights including access to education and healthcare, in effect legislating for a permanent caste system. The result, despite recent reforms, has been enduring stark differences between rural and urban China.
My friend’s brothers are among the rural hundreds of millions who measure out their lives in attempted moves to cities, where treated as second class citizens, they find themselves unequipped to cope with cold market competition. The differences in their life opportunities as compared with their urban peers has nothing to do with character or norms but is the result of merely a deliberately engineered and self perpetuating inequality.
Urbanisation’s gathering pace in China is no guarantee of greater equality: another recent research report, from People’s University, found that when farmers are ‘urbanised’, only twenty percent gain an urban hukou, 13.9% receive urban social security coverage, and only 9.4% received medical insurance, while only 21.4% had access to schools for their children.
On current government forecasts, by 2020 around 170 million rural migrants will be settled in cities and towns but denied urban household registration status and the healthcare, education, social insurance and other benefits that come with it.
When Deng said ‘let some people get rich first’, it turned out inequality was contagious: China’s urban/rural apartheid permitted US manufacturing cost savings of between 30% and 80%, depending on the labour-intensity of the process, with research by Piketty and others showing the the resulting boost in profits accruing largely to capital.
Indeed Gini coefficient trends on opposite sides of the Pacific over the past three decades have eerily mirrored each other, as Chinese elites work to replicate levels of inequality in the US, where the richest 20% now control 90% of the country’s wealth.
The traditional ‘relaxed’ attitude of neoliberals to wealth inequality is that it is a desirable result of competition, which spurs effort and achievement. But as the wealth gap is expanding in both America and China, the danger is the pernicious effect this may have on democratic values like equality of opportunity, and even basic rights and freedoms.
Meanwhile China’s ‘fu er dai’ second generation wealthy are able to monopolise opportunities to put themselves ever further ahead thanks to a level of capital and education that the sundry contents of a drawer in a village house in rural Guangxi can hardly match.
Image by Raymond Li.