Rising Standards of Living

On my way to school the other day I sat on my Flying Pigeon bicycle, mouth agape as I stared at a bus slowly rattling past me kicking up dust from the subway construction for the 2008 Olympics. The two storied bus was packed with people on their way home from Zhong Guan Cun, the Chinese version of Silicon Valley, and as the bus cut its way through the pollution it proudly exclaimed on its side:

Club Med: Quan bao zhi lu! (All inclusive vacations!)

As I stared at the bus 3 men riding 3 wheeled bicycles were hauling massive amounts of Styrofoam to a local recycling center. 1 kilo = 1 Mao (1/10th of 1 yuan). This is how they make their living, and I didn’t ask, but they probably don’t make much over the rural average of 2600 RMB per year. They represent some of the millions of immigrant labor that has been estimated anywhere between 80 to 180 million persons.

I had just finished my exam in comparative politics the previous day and my professor proudly exclaimed that China was “a poor country whose developmental path can’t be compared with others.” This “poor country” was the third nation in history to send a man into space, is currently developing an aircraft carrier, and whose leaders drive expensive foreign made Mercedes Benz’s instead of locally manufactured cars. What gives?

According to the CIA Factbook, the Ginni Index Value, the economic indicator that measures distribution of income throughout society is the same as the US. I am sure that will surprise more than a few people who have been to China. Anyone who has been to downtown Shanghai and then driven 2 hours in any direction is able to see the tremendous difference in living standards (from Mercedes Benz’s to draft animals pulling plows). What is different however is the per capita GDP, roughly $7,600 in China and $43,500 in the US. So the bar is simply higher in the US and thus the bottom of the distribution doesn’t look as low as it does in developing countries such as China. As of 2006 China was home to 300,000 millionaires, according to the World Wealth Report issued by Merrill Lynch and Cap Gemini. The growth rate for these High Net Worth Individuals (HNWI) was 6th in the world. Of note is the highest growth of HNWI’s during that period was in Hong Kong, whose investment in the mainland has paid off handsomely. To contrast that number out of a labor force of 800 million there are roughly 400 Million engaged in farming whose average yearly income is around 2,622 RMB. There is a rush from western luxury brands for these “new elites” but for the majority of Chinese they are merely spectators in this game of grabbing market share.

3 Responses to “Rising Standards of Living”

  1. Your post certainly highlights an issue that strikes anyone who spends time in China’s major cities–including Chinese government leaders. But it also seems like “to be rich is (no longer so) glorious.” Or at least showing it is less appreciated.

    Last month, Beijing Mayor Wang Qishan expressed disapproval of the number of luxury billboards in Beijing saying that these roadside placards advertising villas, cars, and other luxury items create tensions between the rich and the poor. Really? Or more specifically, do these public 2-D displays of extravagance cause any less tension than 3-D versions walking or driving on the streets every day? Moreover, what about the other “billboards”: Beijing’s new shiny office buildings, luxury homes (not all of which are tucked away in the suburbs of Shun Yi), and shopping malls which seem to appear in Beijing every week (including Shih Kong Place ???? http://www.shinkong-place.com which has more top global fashion brands than any other mall in town).

    I agree that for the majority of people in Chinese, this high net worth lifestyle is for now as out of reach as road side billboards–I just wonder whether trying to hide it in airconditioned malls makes any difference.

  2. I agree that for the majority of people in China, this high net worth lifestyle is for now as out of reach as road side billboards–-I just wonder whether trying to hide it in airconditioned malls makes any difference.