Why hard working Chinese is not rich?

Peter D. Heber
01/19/2011 posted Kanchunggun,com

Reposted
4/4/2011

Golf course green fees in China range from 700 Yuan (US$ 106.00) to 1,000 Yuan (US$ 151.00). Those amounts do not include not including caddy fees, golf cart rentals and tips.The green fee for a weekend tee-off in Shenzhen could be $ 1,780 Yuan (US$220 approximately); the caddy fee is 200Yuan, and golf cart rental another 200 Yuan. That cost is more than the monthly salary for most Chinese.

A disturbing 2007 World Bank report pointed out that while China’s annual economic growth between 2001 and 2005 was over 10 percent; the real income of the poorest 10 percent of its population fell by 2.4 percent in the same period. Nowadays, not only is the impoverished population found in farm villages, but also urban areas.

0.4 percent of the population controls 70 percent of the wealth.

At present, China’s society is divided into four classes: the ordinary working class, which accounts for about 90 percent of the population; the middle class accounting for about 7 percent, senior and intermediate rank civil servants accounting for 2.1 percent and the rich, which accounts for less than 0.3 percent of the population. According to the 2006 World Wealth Report released by the Boston Consulting Group, 0.4 percent of China's population controls some 70 percent of China’s wealth, while 5 percent of the U.S. population controls 60 percent of the U.S. wealth. Apparently, China is the most polarized country worldwide in terms of the distribution of wealth.

Who are they?

In early April 2006, a survey jointly conducted by the Chinese State Council Research Office and the Chinese Academy of Social Sciences revealed that as of the end of March 2006 there were 3,220 people whose domestic assets was valued at over 100 million Yuan (US$ 14 million approximately); 2,932 of them, i.e. about 91 percent, are the children of high-ranking officials. The total value of their assets was over 2,045 billion Yuan (US$ approximately 25 billion U.S.). In other words, their average worth was nearly 670 million Yuan (US$ 7 million approximately).

The report also indicated that officials of the Chinese government and the Chinese Communist Party have become the special privileged social group. Their average annual income is about 8 to 25 times higher than that of the ordinary people in the urban areas in that province, and is about 25 to 85 times higher than that of the farmers in the same province.

About 85 to 90 percent of people who are in leading positions in the fields of finance, foreign trade, land development and major construction projects are these children of high ranking officials. For example, by the end of 2005, the value of the import and export trade run by the children of or relatives of high ranking officials amounted to about US$100 billion. More than one million high ranking officials’ family members emigrated overseas.

All of the 12 major real estate developers in Guangdong Province are run by the children of high ranking officials, including a former Politburo member and vice chairman of National People's Congress, a former chairman of the CPPCC, a former governor, and so on. Among the ten major real estate developments in Shanghai, nine of them are owned by the children of high ranking officials. As to the 15 leading construction companies there, except for two state-owned enterprises, the rest of them are also operated by the children of high ranking officials.

Heavy burdens on education, medication and housing

When it comes to education, medication and housing, we will have to talk about the “burdens” that former Premier Zhu Rongji thought should be reformed. Back then, the “burdens” referred specifically to medical expenses. When the People’s Commune System collapsed in 1984, so did the Rural Cooperative Medical System. In 1997 the Chinese regime implemented Medical Care Reform that gradually placed the burden of medical expenses on individuals. In recent years, some 17 percent of medical expenses are covered by the government, and individuals are responsible for over 60 percent, which is in sharp contrast to other developing countries leaning toward democracy where about 60 percent of such bills are paid by the state.

According to economist He Qinglian, in 1995, Chinese government revenues accounted for 14.8 percent of its GDP, while the total wage/income of all the workers in China contributed 13.9 percent to its GDP. As the gap was not so significant then, Zhu Rongji didn’t come up with the idea of discarding the burden; even the expenditures for education, medication, pension and unemployment subsidies were covered by the government. Chinese government revenues accounted for 24 percent of its GDP in 2007, with a growth rate of 10 percent, while the total wage income of all the workers contributed only 11.7 percent to its GDP. Furthermore, the Chinese people are faced with three heavy burdens: costs for education, medication and housing; a pension is unavailable to many people.



The government’s administrative expenditure is as high as 900 billion Yuan (US$ 119.00 billion) per year.

China has the highest administrative cost in the world. In the 25 years between 1982 and 2007, China's government administrative expenses increased 87 times, with an average increase of 23 % each year. CHEN Zhiwu, professor of finance at the USA Yale School of Management said in 2007 for instance that the Chinese government’s administrative expenses accounted for 24 percent of its GDP, which was equivalent to the total disposable income of 370 million people in urban areas, or the total net income of 1,230 million farmers.

Wang Xixin, a contract research fellow of the Standing Committee of the National People's Congress, revealed that the Chinese government’s annual expenditures for transportation and cars for high ranking officials were 400 billion Yuan (US$ 53.3 billion); food costs accounted to 200 billion Yuan (US$30.3 billion) and overseas travel expenses amounted to 300 billion Yuan (US$45.3 approximately); other travel expenses totaled 900 billion Yuan (US$136 billion), about 30 percent of its administrative costs. Such huge administrative costs make it impossible for the 1.3 billion Chinese people to benefit from the state’s wealth.