Economic Gaps in China - Coursework Example

Insert Insert Insert 30 March Economic Gaps in China Economic gap in relation to inequality can be described as the way people differ in the distribution of their assets or income. Furthermore, is not an end in itself, rather, it is the means of increasing the well-being of the people basing on both objective conditions as well as the subjective analysis of their impact on human life. Economic gaps between population arise due to inequalities coupled with several factors such gender inequality, globalization, rural-urban migration, taxation, unbalanced trade, and political systems among others. In China, these factors have contributed to the widening of economic gap as discussed below. The use of Hukou system, a household registration system has promoted the increase of the economic gap among the people of China. Since the early days, the authoritarian state applied the Hukou system to create policies and control the society. It used it to further its agenda of discrimination and exclusion of external interaction with other societies. Its major role of directing and allocating resources internally resulted into a socioeconomic condition where there was a rapid and highly unbalanced economic growth with large regional gaps and increased social tensions among the population. Reforms against its injustices and grievances had been a subject of criticism to this system. Over the past three decades, the high demand for human labor, improved population mobility, and the change to market economy from egalitarian has increased more pressure to abandon the system. The Hukou systems in China creates sociopolitical and economic patterns that are discriminatory to those who enjoy certain benefits and restrictive in nature to the majority who would wish to work in other neighboring prosperous urban centers. It has contributed to uneven economic status while hindering the development of urban slums (Jacka et al. 12). China’s policy of trade liberalization through its commitment to the World Trade Organization (WTO) increased agricultural imports that resulted to an economic gap. This affected its agricultural prices domestically. There had been a fall in prices of wheat, corn, sugar, cotton, soybeans on the world market. Through its liberalization policy, China witnessed imports of such agricultural products increased immensely and flooding the local markets, despite of China producing the same kind of products domestically. This phenomenon meant that the producers of those affected goods had to reduce their prices or lose their predominantly local market. Jacka elaborates that there was unfair treatment of such producers, for example, a corn farmer from Jilin province and Sugar producer from Guanxi had to play in the uneven market ground with producers of less imported produce such as rice. The returns for the less imported product remains normal while the income of the most imported products declines, creating unavoidable economic disparity in the economy (Jacka et al. 16). According to Zang, differences in basic education and health services are some of the main factors for China’s economic inequality. A survey done by China Health and Nutrition in eight provinces established that the average years of education were 11.0 years for urban workers and 6.6 years for rural workers. According to the 2000 census, the school enrollment rates in urban area are between 93 and 95 percent and for the rural areas, the rates figured between 84 percent and 90 percent. The disparity in the quality of schools enrollment in urban areas and rural areas is significant in determining the level of education attainment in China. Poverty has contributed to the failure of rural schools to realize full educational standard as per requirements of China education law. China’s federalism has also contributed to uneven distribution of government funds meant for education welfare. These disparities in the access of education among regions or between urban and rural areas, to a large extent, affect fair economic growth and development (Zang, 15). Demographical changes have in the recent years contributed to unbalanced economic structures of China. Following fertility decline and prolonged life expectancy, population in China has transformed from a phase with high fertility, mortality and low natural growth to a phase with low fertility, mortality and low natural growth. Since 1960, China has seen an increasing rate of aging labor force. This has made the country to amend its plans in relation to the population age structure. The decrease in dependency ratio had previously created a productive population age structure with enough supply of labor force. However, at this rate, the demographic quota for labor force is more likely to be depleted in the few coming years. This reduction of working age population is eventually likely to cause a rise in wages. It can only be avoided by China employing several measures such as setting up accessible pension schemes, encouraging a sustainable rural to urban migration and an increase in retirement age (Zang, 25). The social revolution carried out by the Chinese Communist Party (CCP) after 1949 under the Leadership of Mao was aimed at transforming China from an unequal, minor capitalist society into a centralized socialist planned economy with similarities to the Soviet Union. This change was made effective by the year 1976 just after the death of revolutionary leader; this socialist system came to shape economic inequality in China. In the Rural areas, Chinese employed the collective style of farming, consolidating them into larger variants communes where the population collectively shared labor. Production team cadres controlled the collective fieldwork, with the daily records of family members amounting to work points. Importantly, the value of the working points could only be determined after the harvest. CCP further prohibited villagers from moving to other areas through strict restrictions. As a result, while equalities among families within a collective commune were relatively modest, income differences across rural regions were larger. Furthermore, income and other gaps between villagers and favored urban population became much wider than they had been before the revolution, when no restrictions prevented geographical and social mobility (Zang, 33). Establishment of Special Economic Zones (SEZs) by China in 1979 along its coast attracted foreign companies. This, with an inclusion of a tax relief and other incentives, made it even favorable for foreign factories to be established. Foreign direct investment (FDI) started to be felt for the first time in China, making her the largest receiver within the near Asian countries. Indigenous companies were urged to improve their services and become more efficient to compete with the new entrants; some were consequently privatized. In a short span of time, rural towns along the coast such as Shenzhen grew into large cities with migrants coming to provide labor. As a result of this rapid growth of China’s coastal cities, disparities in regional development became evident, with the economic gap of other interior rural regions becoming wider. China’s countryside economic growth lagged behind the growth of their fellow urban areas (Zang, 43). Ethnicity is a factor that determines economic gaps in China and it can be explained through several ways. According to Zang, a larger part of ethnic minority population is sparsely and unevenly distributed in rural areas. Unlike the majorities that are concentrated in urban areas, the minority ethnic population is found in less developed western part of China. Furthermore, they are segmented into smaller conglomerate ethnic groups. Ethnic minorities live in low-income rural areas where they are disadvantaged with low quality education and poor standards of living. This consequently affects their labor market participation. With inadequate social network, the minority ethnic group lacks information on job opportunities, which further reduces their economic growth (Zang, 47). The methods used by the Chinese government to carry out taxation and give out subsidies contribute immensely to the widening of the economic gap. Following 1980 and 1984 reforms, where China’s fiscal system was decentralized at all levels it has encountered difficulty in collecting adequate revenue to fund its rapidly growing Rural and Urban expenditures. This has necessitated the government to increase self-relying budgets of local levels and transfer fiscal subsidies awarding from the upper levels of government to the lower level. County and rural township governments in less developed areas have in several cases had to increase their revenues by charging unwarranted fees and exorbitant levies in order to meet their recurrent expenditure budgets. This has made it easier for corrupt officials in some rural areas to increase taxes, which are neither documented. This taxation is carried out per household on a per capita basis. In spite of his heightened taxation, the rural villagers have complained of no feasible investment or improvement in provisions of fundamental services, resulting to protests (Jacka et al, 37). Rural–urban differences in China have persistently accounted for a large share of income inequality. Today, rural urban differences are a result of historical effects of socialism. Since the 1950s, Communist Party laid systems that separated urban and rural areas, with the mobility of the residents strictly controlled though movement permit, a system referred to as Hukou system. The establishment of urban and industrial development is normally the fundamental reason for economic planning. During those days, the urban areas laborers were provided with an “iron rice bowl” of lifetime employment, health care, housing, and pension benefits. Compared to their fellow rural residents, they were organized into collectives through in whom access to basic healthcare and education was substantially improved. However, in order to enhance rapid industrialization, the Communist government, through its planning system, set prices and directed the investments through discriminatory ways against agriculture and rural areas, leading to sharp differences in the living standards of urban and rural residents. Jacka further adds that this contribution to overall inequality creates incentives for rural to urban migration, thus reduction in rural development that led to the widening of the economic gap (Jacka et al, 43). High cost of living in urban areas is also one of the factors that have made the gap wider. The high cost of commodities in China cities such as Beijing and Hong Kong makes living cost to escalate to alarming rates. The large population in such cities makes the cost of amenities such as food, groceries, electricity bill, and mobility cost to be high. The technical innovation of Chinese economy has seen the living standards to be unbearable, especially to low earning citizens. However, in the rural regions of China, basic commodities are available in plenty and there is less competition in propensity to acquire them. This high price of goods and amenities is the same across the high earners and low earners. The low earners cadre ends up remaining with little income for savings unlike their counterpart, who feel less pressed with such hard economic measures. There are no subsidies issued out by Chinese government to cater for the low earner, as this would amount to economic discrimination. Therefore, the rich will continue to get richer as the poor become poorer and disgruntled. Protests and public unrests to reduce the high cost of living have not borne any fruits, as the stiff competition and the high population rates across the cities in China make it worthless to complain; it is a survival for the fittest kind of phenomena (Jacka et al, 49). Globalization comes with clear economic opportunities and many benefits, but also comes with substantial social costs that often affect people through several economic impacts. It contributes to global tensions and normally promotes linkages, divisions, simultaneous inclusion and exclusion as well as connectedness and isolation. Globalization influences development of a country in a way that it brings people together and at the same time widens the divisions between them; this is an economic process of sort, which has social implications. According to Zang, globalization is characterized by higher wages and employment characteristics. With comparison to capitalist countries, this has accelerated high-level desire to have the same employment standards in China. This creates instability as certain careers get to be identified with higher income level, thus magnifying tensions within local job markets and bringing up cases of social divisions and segregation of class within the society (Zang 45). Gender inequality in China is evidently one of the contributors to the growth in economic gap. Jacka reiterates that China has the biggest gender disparity in terms of sex in the world, for instance, the ratio of Men to Women is at alarming 122 to 100 respectively. The prevalence of traditional preference for male children in China with new technologies that enable expectant parents to know the sex of their expected children has resulted to families aborting female foetuses at very high rates in the recent years. The preference of male children in China is in some cases appended to wealth and income, and this discrimination is on an upward trend in spite of economic growth. It should be noted that, women have the ability to do similar jobs as men can do such as health care, communication, sales, and mechanical but are normally paid a lower income for the same job; a man would be paid a slightly higher percentage. Zang further elaborates that despite of women having the same level of education in China, only a few of them achieve success in the workplace. Cultural expectations interfere with the just system of rewarding hard work such as promotions. More cases of discriminated upon women can be witnessed in national politics; for instance, political parties in China have very few women as delegates compared to men. Although there have been several campaigns to reduce gender inequality in China, the gap between men and women remains huge (Zang 47). In conclusion, China’s economic gap can only be reduced if social-economic factors are checked and acted upon effectively. This can be done through creating a level playing ground as far as trade is concerned, having cultural practices that are fair to men and women, setting equal standards of education in all regions, and controlling or stamping out corruption completely. In addition, there is need to improve social amenities throughout the country, provide adequate domestic and foreign markets for domestic products, enhance differentiation of domestic goods, and resort to communism way of governance that used to take care of all without discrimination. The current spate of globalization of trade and capitalism has brought some benefits as far as access to capital and freedom of doing business is concerned, thus creating avenues for economic growth and development. Indeed, China could not be where it is currently, were it not for globalization, which influenced multinational corporations and developed countries to offer the much-needed foreign direct investment to China. Moreover, many job opportunities have been created thus lifting the living conditions of many Chinese people. However, despite all these gaps, inequality continues to thrive, especially when policies tend to be insensitive to the plight of less privileged and minorities, thus widening the gap between the haves and have-nots further. Moreover, the Chinese government and the society at large has not done enough to close this gap, especially when one looks at the inequality that thrives between male and females where boy-child gets more preference than girl-child in Chinese society. All in all, proper policies are expected to be effected to ensure that the country enhances equality in the near future. Works Cited Jacka, Tamara, Andrew Kipnis and Sally Sargeson. Contemporary China: Society and Social Change. Cambridge: Cambridge University Press, 2013. Zang, Xiaowei. Understanding Chinese Society. London: Routledge, 2011. Read More