It’s not that the poor are getting poorer in China, but the rich are definitely getting richer. At least in numbers. The population of Chinese high net worth individuals, those with assets of $1 million or more, rose by 18% last year reports Kenneth Rapoza in Forbes.
That’s more than the global average, where the millionaire population grew by 14.7%. While the wealthy are becoming more numerous in China, the gap between the rich and poor is widening at a time when China’s economy is restructuring. This does not bode well for low income Chinese, who could once count on a job at any of China’s hundreds of automotive manufacturers, or housing developers. The focus now is on higher-tech, value added goods and services, rather than the old low cost labour export model that made China rich. It’s a problem for China’s government who will have to build out a non-existent safety net for low skilled workers.
China’s Gini coefficient — the global measure for income disparity — is now around 0.55 compared to 0.45 in the US. The closer to zero the better equality between the social classes. China’s Gini coefficient is worsening, but that’s because back in the 1980s the country was mostly poor. In 1980, the Gini coefficient was 0.30. In 2012, the Chinese government refused to release the country’s Gini coefficient to the World Bank and United Nations. Generally, when the coefficient reaches 0.50, it indicates that the gap between rich and poor is severe. “Ordinary persons in China know about this, as they have personally experienced it in their lives,” an analyst says.