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Home » Opinion » Chinese Views
Millions missing out on fruits of GDP surge
By Ni Tao |
May 14, 2010, Friday
|
Print Edition
Print Edition
EARLIER this year, a gaping shortage of workers caught factories in China's manufacturing hub off guard as the global downturn lessened its grip on the country and new overseas orders were placed.
The shortfall was reported to be as large as two million in the Pearl River Delta in South China. Similar difficulties of recruiting and retaining workers, many employed by labor-intensive industries, later spread on to the other export powerhouse in the Yangtze River Delta, with about 70 percent of businesses there suffering from a lack of manpower.
In a country awash in and reliant on cheap labor, this sudden chokehold on its lifeblood is noteworthy, as it highlighted yet again how low wages and unsatisfactory benefits for the working class could derail the country's growth.
Low wages, poor working conditions and long working hours all contributed to the shortfall seen at the beginning of this year, according to Zhang Jianguo, head of the collective contracts department at the All-China Federation of Trade Unions (ACFTU).
Nationwide, the share of China's GDP consisting of wage and salary income has been declining ever since 1983, the peak year, with a ratio of 56.5 percent. As of 2005, the figure had fallen to 36.6 percent. In the intervening years, the proportion shrank by about 20 percentage points, Zhang was quoted as saying in a Beijing News report on Wednesday.
A recent ACFTU poll, cited also in the Beijing News report, found that 23.4 percent of employees' wages barely increased over the past five years, while 75.2 percent of those surveyed said the current distribution of wealth is uneven. Sixty-one percent of the respondents attributed the biggest source of inequality to low income of ordinary laborers.
Questionable statistics
Even though the survey's scope was not reported, the statistics it produced serve as a timely signal at a time of widespread confusion sowed by a flurry of questionable statistics.
When officials at the National Bureau of Statistics released in March the figure for average income growth in 2009, voices of doubt over its accuracy couldn't be louder. Average income of urban residents grew to 17,175 yuan (US$2,515), up 8.8 percent from a year earlier, the bureau's data showed.
But its methodology is widely and intensely scrutinized as the reason for what many believe are inflated figures showing income growth. It only records staff incomes of joint stock companies, foreign firms and state-owned enterprises, while excluding small and medium private businesses that employ over 80 percent of the nation's work force.
An acutely felt discrepancy between official figures and popular perception of income levels has underscored society's seething anger at the growing wealth gap between rich and poor - and the distribution system that is perpetuating inequality.
One can infer from Zhang's remarks that in the 22 years since the ACFTU started tracking the income trajectory, capital gains, most notably securities dividends and property speculation, have emerged as a major propeller of GDP.
Once a country where nearly everyone was a wage earner about 20 years ago, China now has a sizable populace that makes fortunes out of activities that have little to do with work in its classical sense.
A Xinhua report published on Monday says real estate, mining and securities are ranked as the biggest money-spinners among all industries, with a minority of people in these trades - often in the upper echelons of the value chain - becoming ultra-rich over the past few years.
Exactly how these nouveaux riches accumulated immense wealth at such bewildering speed is anyone's guess. But given a steady string of media revelations about official corruption in these industries, it's not hard to imagine where some of the biggest chunk of wealth has gone.
Unfair distribution
Moreover, many wage earners have either bought into housing bubbles with their life savings or poured hard-won cash into the stock market, only to lose their shirts when stock index tumbled - to the benefits of a few manipulative investors.
Due to unfair mechanisms of wealth distribution, many Chinese have missed out on the fruits of the thriving economy, said Yale University economics professor Chen Zhiwu in an interview with Nanfengchuang, a current affairs magazine.
"Most Chinese live on low salaries, not on the profits accruing from state assets they nominally own. However spectacular the Chinese economy appears, wealth created by land deals and SOEs seldom flows to ordinary Chinese," Chen was quoted as saying in the July 8, 2008, issue of Nanfengchuang.
"China's national wealth expands by 10 trillion yuan each year, averaging 8,000 yuan per person. But not a single Chinese in his or her right mind would think he or she has an 8,000 yuan windfall to spare," he added.
It's no surprise that, with little trickle-down effect, the increasing national fortune hasn't buoyed China's anemic consumer spending, according to Chen, who made similar criticism in an interview with New Weekly last August.
The scenes of Chinese millionaires snapping up luxury goods overseas may have fueled the wrong notion that the Chinese as a nation now have enough power to spend the world out of the downturn.
But the real picture is dismal. China's lackluster purchasing power has been an obstacle to its bid to overhaul its manufacturing-powered economy, often associated with the low-end image. Here arises the question - what's the point of lifting GDP when millions of people cannot consume the goods they themselves produce?
And what of the income disparity, already dangerously high enough to jeopardize social stability, if nothing is done to revive the axiom that there is no better shortcut to money and fame than honest work?
The shortfall was reported to be as large as two million in the Pearl River Delta in South China. Similar difficulties of recruiting and retaining workers, many employed by labor-intensive industries, later spread on to the other export powerhouse in the Yangtze River Delta, with about 70 percent of businesses there suffering from a lack of manpower.
In a country awash in and reliant on cheap labor, this sudden chokehold on its lifeblood is noteworthy, as it highlighted yet again how low wages and unsatisfactory benefits for the working class could derail the country's growth.
Low wages, poor working conditions and long working hours all contributed to the shortfall seen at the beginning of this year, according to Zhang Jianguo, head of the collective contracts department at the All-China Federation of Trade Unions (ACFTU).
Nationwide, the share of China's GDP consisting of wage and salary income has been declining ever since 1983, the peak year, with a ratio of 56.5 percent. As of 2005, the figure had fallen to 36.6 percent. In the intervening years, the proportion shrank by about 20 percentage points, Zhang was quoted as saying in a Beijing News report on Wednesday.
A recent ACFTU poll, cited also in the Beijing News report, found that 23.4 percent of employees' wages barely increased over the past five years, while 75.2 percent of those surveyed said the current distribution of wealth is uneven. Sixty-one percent of the respondents attributed the biggest source of inequality to low income of ordinary laborers.
Questionable statistics
Even though the survey's scope was not reported, the statistics it produced serve as a timely signal at a time of widespread confusion sowed by a flurry of questionable statistics.
When officials at the National Bureau of Statistics released in March the figure for average income growth in 2009, voices of doubt over its accuracy couldn't be louder. Average income of urban residents grew to 17,175 yuan (US$2,515), up 8.8 percent from a year earlier, the bureau's data showed.
But its methodology is widely and intensely scrutinized as the reason for what many believe are inflated figures showing income growth. It only records staff incomes of joint stock companies, foreign firms and state-owned enterprises, while excluding small and medium private businesses that employ over 80 percent of the nation's work force.
An acutely felt discrepancy between official figures and popular perception of income levels has underscored society's seething anger at the growing wealth gap between rich and poor - and the distribution system that is perpetuating inequality.
One can infer from Zhang's remarks that in the 22 years since the ACFTU started tracking the income trajectory, capital gains, most notably securities dividends and property speculation, have emerged as a major propeller of GDP.
Once a country where nearly everyone was a wage earner about 20 years ago, China now has a sizable populace that makes fortunes out of activities that have little to do with work in its classical sense.
A Xinhua report published on Monday says real estate, mining and securities are ranked as the biggest money-spinners among all industries, with a minority of people in these trades - often in the upper echelons of the value chain - becoming ultra-rich over the past few years.
Exactly how these nouveaux riches accumulated immense wealth at such bewildering speed is anyone's guess. But given a steady string of media revelations about official corruption in these industries, it's not hard to imagine where some of the biggest chunk of wealth has gone.
Unfair distribution
Moreover, many wage earners have either bought into housing bubbles with their life savings or poured hard-won cash into the stock market, only to lose their shirts when stock index tumbled - to the benefits of a few manipulative investors.
Due to unfair mechanisms of wealth distribution, many Chinese have missed out on the fruits of the thriving economy, said Yale University economics professor Chen Zhiwu in an interview with Nanfengchuang, a current affairs magazine.
"Most Chinese live on low salaries, not on the profits accruing from state assets they nominally own. However spectacular the Chinese economy appears, wealth created by land deals and SOEs seldom flows to ordinary Chinese," Chen was quoted as saying in the July 8, 2008, issue of Nanfengchuang.
"China's national wealth expands by 10 trillion yuan each year, averaging 8,000 yuan per person. But not a single Chinese in his or her right mind would think he or she has an 8,000 yuan windfall to spare," he added.
It's no surprise that, with little trickle-down effect, the increasing national fortune hasn't buoyed China's anemic consumer spending, according to Chen, who made similar criticism in an interview with New Weekly last August.
The scenes of Chinese millionaires snapping up luxury goods overseas may have fueled the wrong notion that the Chinese as a nation now have enough power to spend the world out of the downturn.
But the real picture is dismal. China's lackluster purchasing power has been an obstacle to its bid to overhaul its manufacturing-powered economy, often associated with the low-end image. Here arises the question - what's the point of lifting GDP when millions of people cannot consume the goods they themselves produce?
And what of the income disparity, already dangerously high enough to jeopardize social stability, if nothing is done to revive the axiom that there is no better shortcut to money and fame than honest work?
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