Wealth rises in China with increasing social cost
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Economic conditions around the world may be deteriorating, but you couldn’t tell it by the headlines in China.
The latest list of the country’s mega-rich was released last week, showing tycoons of the property, consumer goods and the Internet industries bursting with cash in another banner year of wealth creation.
Another report says Chinese millionaires will make up half the population of high-net-worth people in Asia in the coming years.
HSBC is predicting that China will overtake Japan this year as the world’s largest consumer of luxury goods; a Chinese investor is trying to buy a chunk of Iceland for $8.8 million; and news reports Tuesday said cash-strapped Rome is cozying up to Beijing hoping it’ll open its checkbook to invest in Italian bonds and companies.
But at what price?
There’s a growing unease about the gap between rich and poor in China -- a rift that appears to be widening and threatening the government’s motto of stability at all costs.
‘Becoming rich through honest work and legal means is glorious. But at the same time, the public is worrying that the widening wealth gap between rich and poor is hurting social harmony,’ read an official New China News Agency editorial Friday.
To put the disparity in perspective, the vast majority of China’s 1.3 billion people aren’t even subject to income taxes because they earn too little. Only 24 million people make the minimum $545 monthly income necessary to be taxed, according to the Ministry of Finance.
China’s per-capita annual income of $7,600 ranks below that of Angola and Albania.
As food and property prices move higher, populist resentment grows. Take away outrage over the privileged elite, corruption and mistresses and there would be a lot less to write about on China’s wildly popular micro-blog services.
(The scandal du jour is over the beating of a Beijing couple at the hands of 15-year-old driving a BMW without a license. The boy, Li Tianyi, turned out to be the son of a famous People’s Liberation Army singer).
After decades of imploring its people to get rich, China’s communist rulers are now asking citizens to dial the ostentation down a notch. Earlier this year, Beijing banned billboards that promoted ‘hedonism, lavishness and the worship of foreign things,’ Bloomberg reported.
‘The government is facing a conflict,’ Michael Ouyang, representative of the World Luxury Assn. in China, told the Washington Post. ‘They don’t want to promote luxury because they are worried people who cannot afford it will see the advertisements. But they don’t want to limit luxury products because it’s good for the economy. So they’re facing a dilemma.’
-- David Pierson