Wide Wealth Gaps in China Threaten Both the Internal Economy and the Regime
Here is one way that authoritarian China is failing.Wide wealth and power gaps threaten not only the development of a vibrant internal economy, but also the regime itself.
- Prior to the state retaking control of the economy after Tiananmen, 80% of the hundreds of millions of Chinese who escaped poverty did so in the 10 years prior to the 1989 Tiananmen protests. In response to Tiananmen, Beijing halted reforms and changed direction. Eighty percent of the hundreds of millions of Chinese who escaped poverty did so in the first 10 years of reform leading up to the 1989 Tiananmen protests – after which the state retook control of the economy.
- The 75 million CCP members and a majority of the nascent middle class share in the country's most valued economic, professional, and intellectual opportunities. Joining the party becomes a lucrative career move. The 50 million person to 200 million person middle class is most strongly attracted to the CCP, which controls the most important industries and the bulk of the country's capital, as well as by overseeing an extensive system of awards, promotions, and regulation.
- About 1 billion people fall outside of China's state-led model of development, and in just one generation, China has become the most unequal country in all Asia. About 1 billion people are missing out on the fruits of prosperity. They have little chance of rising up and suffer under the abuses of corrupt and incompetent rule by China's 45 million local officials.
- The Chinese economy has grown tremendously over the last few decades. But it's been the farmers, the ones who brought the Communists to power in the first place, who have been left behind. Sixty years later there are still 800 million of them waiting for their promised prosperity.
- Mao's policy of making Chinese produce large families in the 50s and 60s has contributed greatly to exacerbating the scale of today's inequality, Peter Denlinger, who consults on investments with a strong China angle, reminds.
- Some Chinese commentators fear that a growing sense of powerlessness, in the form of a growing bitter class divide, could change to broader complaints about the entire regime. China's legal system is often part of the problem. The system conveys sense that one can get away with murder. Before sentencing, judges in criminal cases typically take into account how much compensation is paid to victims and their families. The wide wealth gaps in China have created a situation where with enough money you can get away with murder. The rich continue to live effectively above the law "Why do you think the children of rich parents act this way?" asked Dai Wangchao, the victim's 21-year-old boyfriend. "Because they think they won't be punished." He added: "If it was the other way around, I would have to spend a long time in prison." Even judges can be bought if one has the right connections, and the construction and real estate sectors are infamous for corruption.
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