China now has the second largest economy in the world after the United States. But there are still some obstacles that the country has to overcome in the course of its economic development. These obstacles revolve around the income or wealth gap which exists in the country.
The wealth gap in China remains one of the most important problems in the country and this could have tremendous impact on the economy. The rapid years of GDP growth have had their effect on the economy, and made it what it is today. However there are certain factors that should be taken into account, and additionally looked at in relation to economic development.
According to Xinhua News Agency, the richer one-fifth of China’s population earns about 50 percent of the income, and the poorer classes take home only four percent of the income. “The income gap, which has exceeded reasonable limits, exhibits a further widening trend. If it continues this way for a long time, the phenomenon may give rise to various sorts of social instability,” Xinhua News agency reported.
China is, in fact, still developing, so this occurrence is something natural. This is indeed true. But what we should also remember is that this is something, which could actually slow down the development. No matter how fast the tempo of growth is, if you still have a large amount of people in the rural areas living in poverty, it is a sign that development has not gone as far as we would expect.
We have to admit, however, that China is doing a lot to make the wealth gap as little as possible. Over 500 million people have so far been lifted out of poverty by the government. The People’s Republic is aiming to reach the poverty reduction goals set by the United Nations Millennium Development Goals (MDGs). Eradicating poverty is one of the most important goals set out by the UN under the Millennium Development program; and looking at the wider picture, this goal around the world is being reached largely because of the contributions made by China. Out of many countries that are coping with poverty around the world, China is one of the places with the most significant results in this aspect. For example, Uri Dadush, a senior associate and Director at Carnegie Endowment for International Peace’s International Economics Program, China will eradicate poverty in the next 10 to 15 years. According to the World Bank, poverty in China fell from 80 to 15 percent between 1981 and 2005. These numbers are very impressive considering the short period of time within which this has been achieved.
However, there are still millions of people living on less than $1.25 a day, especially in the more remote areas of the country.
Nevertheless, according to a blueprint that was issued by the Chinese Academy of Sciences, in 2050, 1.3 billion Chinese will live in a moderately developed society, with a minimum monthly income of 1,300 U.S. dollars, an average life-expectancy of more than 80 years and social services available to all. According to the same report, by that time no one in the country will live with an annual income of less than 668 Yuan (81 U.S. dollars) per capita, the country’s absolute poverty line.
It is perhaps still hard to say that poverty will be completely eradicated within the next 10-15 years, given China’s huge population – about 1.4 billion. However, the date 2050 sounds rather promising. It gives time for society to adjust, for life to change, for the country to develop more. This is what we can look forward to in the future.