Wealth gap threatens development
Zhi MingChina Daily  Updated: 2004-12-16 08:48

China's economy is still running on the fast track despite the recent macroeconomic control measures. Experts estimate the country's gross domestic product (GDP) may hover around 9 per cent this year. Last year, it was 9.3 per cent year on year. Next year, the figure would still remain between 8 and 9 per cent, according to estimates by domestic economists.

Years of rapid GDP growth have made the national economy ever powerful. But a balanced development, which is advocated by the central leadership and in the fundamental interests of the people, requires more than a sound and fast-growing economy. Our society faces many problems as our nation develops.

A recent book on China's social life compiled by the Chinese Academy of Social Sciences (CASS) lists many such problems, including unemployment, corruption and a widening financial gap between rural and urban areas. All these problems ring alarm bells for those steering the country's long-term development.

The income gap has widened between urban and rural residents.

In 1985, the disposable income of each urban resident was almost double that of a farming family's total income.

By 2002, it had more than tripled.

The authorities have taken steps to bridge the gap. The agricultural tax, for example, has been cut in some areas to lessen the financial burden of farmers.

Restrictions on farmers going to cities to work have also been eased to varying degrees across the country. This adds to the non-agricultural income of farmers.

In the first three quarters of 2004, the income of farmers increased by 10 per cent year on year, 3 percentage points higher than that of urban residents, according to the National Bureau of Statistics. It is the best scenario of farmers' income growth since the early 1990s.

What is uncertain is whether the growth momentum will be sustained over the coming years.

It remains that the gap between the rich and the poor are alarmingly large.

A report in the CASS book said the disposable income of richest families, which account for 10 per cent of the population, is eight times that of the poorest.

The country has paid much attention to how to sustain our economic growth. The yawning income gap, however, may jeopardize the efficiency of the economic growth and lead to big social chasm. The surfacing resentment towards the rich in some places serves as a reminder of the necessity to bridge the gap.

Results published in the investigative CASS book also pointed to the increasing education expenditure. Chinese families have to pay more for education than housing and post-retirement expenditures.

This is "abnormal," according to Li Peilin, deputy director with the Institute of Sociology under the Chinese Academy of Social Sciences in the book.

The fear of rising education expenditure not only forces people to save more and spend less, which affects domestic demand - an engine of the economy - but also risks making people, especially those in the poor rural areas, unwilling to send their children to school.

Education governs a country's long-term development potential. Soaring educational expenditure may keep the potential from being fully exploited.

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