The Reasons Why the Gap between the Rich and Poor Has Widened in China - Case Study Example

The Reasons why the Gap between the Rich and Poor has widened in China Name Course Name and Code Instructor’s Name Date Economies across the world have witnessed growth while other sectors have witnessed depression. A change in economic dispensation has resulted in some people benefiting more than others do. For example, some regions have witnessed growth in economies but huge divide exists between the super rich and the poor people. An example of such a region or economy is that of China. China is among the most rapidly growing economies in the world. This has resulted in increase in per capita income that translates into reduction of poverty. However, through this period numerous disparities have been witnessed in China. The aim of this paper is to analyse the reasons behind why the gap between rich and poor has widened in China. Income inequality has risen between the individuals at the rural areas and people from the urban areas because of employment and investment opportunities (Davis & Feng, 2009). The poor people in the rural areas have few markets for their produce and they do not add value to these products resulting in lower prices compared to owners of industries who can add value to these raw materials resulting in better revenues (Chen & Zhou, 2005). The people in rural areas are poorer because they do not have ideas on how they can improve their business, which translates in stagnating type of economy and may result in them becoming poorer (Shi & Sato, 2006). However, the rich persons have better ideas and are within environments whereby it is easier to access appropriate information that leads into better revenues (Chan et al., 2009). Therefore, value addition is an important component in generating income and the poor people are not able to add this value. Moreover, the government plays a role in advancing inequality (Wu & Zhou, 2011). The government passed a resolution that prevents or manages rural-urban migration resulting in limited chances to the poor rural population (Chan et al., 2009). Most people in the rural areas are poorer when compared to persons in the urban areas (Dollar, 2004). Therefore, the people in the rural areas are prevented from accessing better job opportunities and other sources of income from the urban centres (Chen & Zhou, 2005). Only people in the urban centres can access opportunities providing a better opportunity for the rich persons in the urban areas to access the opportunities and be able to improve both socially and economically (Whyte, 2010). The richer persons in the urban areas continue to earn more and hence resulting in inequality. The government has also instituted and passed legislations that address mortgaging or selling rural land preventing additional opportunities for the rural poor (Andersen & Taylor, 2006). This means those people with resources can utilise their lands in production because of this legislation (Davis & Feng, 2009). Therefore, the richer people because of the economic position can develop their properties and they continuing becoming richer compared to poorer persons who lack the appropriate resources (Bhalla & Qiu, 2006). Resources are important in becoming richer and those individuals who show promising income generation can access this (Chan et al., 2009). Rich people can access funding from commercial banks and other investment corporations (Held & Kaya, 2007). This is because the rich have information on own accomplishments and how they can generate more revenues when compared to the poor who do not have evidence on income generation (Braun, 2008). They present the information to the commercial banks that advances them loans in favourable conditions compared to the poor persons whose credit capability cannot be accessed. Therefore, the rich receives better funding while the poor cannot receive the funds and hence the rich Chinese people continue to grow economically (Guo, 2012). Professionalism and high levels of education and the economic factors associated to these components. Education is an important requirement within the economy and usually determines the amount of income in which someone should earn (Chen & Zhou, 2005). The rural population do not access or achieve appropriate education and their professionalism is lower when compared to persons living in the urban areas (Chan et al., 2009). The urban population has better chances and capability to ensure they earn predictable income when compared to those rural population that their economies are based on farming, which is vulnerable to climate related issues (Davis & Feng, 2009). Therefore, the education system favours the urban population than the rural population and hence determines the income in which an individual can get and utilise in their daily activities (Wu & Zhou, 2011). Hence, education disparity is directly associated to economic disparity within the Chinese environmental operations. Education and training is also crucial in developing societies and economies (Chan et al., 2009). Without effective and appropriate educational system that include infrastructure, it prevents some regions from developing faster compared to other regions (Wu & Zhou, 2011). Literate society can easily choose the appropriate approach to fulfil activities compared to illiterate society (Chan et al., 2009). Therefore, the poor have minimal access to education because they tend to balance the requirements of learning and earning some income (Wu & Zhou, 2011). Instead of going to school, most of the parents assign duties to the young population resulting in a continual inequality (Shue & Wong, 2007). In rural China, the issue of ineffective educational system has resulted in slower economic and industrial development that affects the overall development of the society, lagging behind the faster developing urban areas (Chan et al., 2009). From the analyses, it is evident that proper educational system is important in ensuring or reducing inequality resulting in development of lagging regions (rural areas). Health is an important requirement that determines whether an individual can operate effectively and within the prescribed health or whether an individual would be prevented from accomplishing duties due to health related. Good health contributes positively towards the development of the society both is social and economic approach (Davis & Feng, 2009). The government of China has invested heavily to develop health systems within the urban areas when compared to the rural areas (Guo, 2011). This aspect has forced individuals in the rural areas to access poor medical facilities and systems that prevent them from recuperating faster that should be (Wu & Zhou, 2011). This means the medical system with the rural areas is poorer compared to the medical system within the urban areas. In addition, the lack of effective health system within the rural areas forces the people to invest more to accomplish the requirements of the medical system when compared to urban people (Howard-Hassmann, 2010). The urban individuals have medical insurance that is effective while such systems do not exist in rural areas (Wu & Zhou, 2011). This means rural people have to use a lot of money to address their medical concerns, which eats into their incomes (Chan et al., 2009). Moreover, the recuperation period between people in the urban areas to people in the rural areas is different. This time wasted in recuperating affects and wastes man-hours and they do poorly in revenue generation when compared to urban population (Chen & Zhou, 2005). Hence, urban people are better placed and a result of inequality because of health system. The government of China introduced a market system economy that aimed to address the challenges associated with the traditional approach of business (Martell, 2010). However, the idea was appropriate but the framework was not viable because of the policy features instituted into the system. The policies and framework instituted by the Chinese government helped the urban areas to develop faster when compared to the rural areas (Davis & Feng, 2009). Rural areas are involved in production of agricultural related products that result in lower profits and revenues when compared to the processed and value added products in the urban areas (Chan et al., 2009). According to the market system, the rural areas produce the raw materials while the urban areas refine the products. From this type of market system, the people in the urban areas have better job opportunities because of industrial approach of business rather than contemporary approach in rural areas (Chan et al., 2009). Through the market system, the people in the urban areas continue to improve their economic and social lifestyles while individuals in the rural areas continue to cultivate; non-mechanised cultivation system that is encouraged in China is not effective compared to mechanised system (Wu & Zhou, 2011). Therefore, the market system also favours individuals in the urban areas and hence increases in the divide of the rich from the poor people. The fiscal system in China is decentralised and relies on the local government to fund basic education and health systems (Milanovic, 2006). The result of this fiscal policy is that the poor villages cannot afford good services and these poor villagers cannot afford the high private costs that are associated with these important public services (Chan et al., 2009). Decentralisation is the process of dispersing and redistributing powers and functions for central authority to other smaller authorities (Davis & Feng, 2009). Decentralisation is not well planed resulting in some sections of the economies and societies not accessing the appropriate infrastructure and resources. The infrastructure within the urban areas is advanced compared to rural areas where most poor people are living (Chen & Zhou, 2005). The people at the urban centres who in most instances are rich are better placed to succeed in their operations. This has resulted in inequality between the rich and the poor because most of the rich people are found in those regions that have better resources and infrastructural developments. Another problem associated with this inequality is the huge trade surplus, which China has (Wu & Zhou, 2011). The surplus economy stimulates the urban industrial sector but neglects the rural development sector (Zhuang, 2011). The industrial sector within the urban centres do not create more jobs but the government continues pumping more revenues rather than supporting and funding rural sector, which is potential in creating new and additional employment opportunities (Liu, 2011). Inequality in distribution of surplus incomes affects other regions that are developing at a slower rate that translates in affecting the people within that given environment (Chan et al., 2009). Another problem that has contributed immensely to inequality is the issue of corruption. Corruption is a chronic disease to any society or economy because few people encourage the vice (Chen & Zhou, 2005). Corruption comes in different forms and the rich people are usually involved in large-scale corruption in China (Wu & Zhou, 2011). The rich people can easily access tenders and other government investment vehicles with ease compared to poor people who do not have connections (Davis & Feng, 2009). The connections are associated with corrupt activities whether for financial gain or for any other benefit (Chan et al., 2009). Through this process, the richer continues to become richer while the poor meets the costs associated to corruption related activities. Inequality is inherent in societies across the world. However, the gap between the rich and the poor in China has exemplified the idea of inequality. The Chinese government has played a major role in expanding the gap between the rich and the poor. This is attributed to legislations and policies that favour the rich. For example, the restriction on mortgage or selling lands in rural areas whereby there are many poor people prevents these poor people from gaining income of their investments. This approach favours the rich because they have enough resources to develop their lands. In addition, decentralisation, market system, fiscal policy have also contributed immensely to the growing gap between the rich and the poor. Moreover, the education, health and infrastructural developments have favoured the rich since the rich can maximise on these opportunities into developing their own revenues. References Andersen, M., & Taylor, H. (2006). Sociology: Understanding a diverse society. London: Cengage Learning Bhalla, A., & Qiu, S. (2006). Poverty and inequality among Chinese minorities. London: Routledge Braun, M. (2008). Does it matter for the business world whether globalization worsens income inequality between and within nations? London: Grin Verlag Chan, K., Kwok-Bun, C., Ku, A., & Yin-Wah. (2009). 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