China: Income gap rings alarm

Discussion in 'Economy & Infrastructure' started by Ray, Feb 7, 2011.

  1. Ray

    Ray The Chairman Defence Professionals Moderator

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    Though from Global Times, one would like to know that if this report is correct then how will it affect China, in so far as:

    1. Political stability.

    2. Change in policy to pay attention not only towards the economic resurgence of China as a whole, but also on the social issues as eradicating
    a. the income gap.
    b. eradicating poverty.
    c. improving social security and stability.

    How has the Hokuo system helped in increasing the gap? It appears to be a very benevolent system where none can 'go under', since all aspects of existence is catered for.

    What is meant in the report - 'growing gap between monopoly in-dustries and other types'?

    What is exactly meant in real terms of the report - The gap could widen to five to 10 times if housing, employees' welfare and other forms of income are taken into account, Li told Xinhua.

    The report states -Zhong Dajun, director of the Beijing Dajun Economy Observe Institute, however, cautioned that any reform would be difficult, as it would involve various interest groups, while "the rights of workers should be strengthened, and their voice should be expressed so as to determine that they are not underpaid."

    Could this be explained in real terms?

    The report states - The income gap will not only bring social unrest but also hit the country's economy, Zhong warned.

    How will social unrest hit the country's economy? Strikes are not allowed I believe.
     
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  3. p2prada

    p2prada Stars and Ambassadors Stars and Ambassadors

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    The industrialized sectors of the country are politically stable.

    India's economic gap is smaller if you read Gini coefficient. But the actual numbers are much larger. So, this is something both countries have in common.

    Hokuo has a lot of rules and regulations that affect rural folk. The Urban folk need this system to register their "urban" land like houses. But rural workers, if they want to work in the city, have to go through a lot of bureaucratic hurdles for migration. This policy is not free for all. It's like a villager trying to get a Visa to work in Shanghai. Not all of them get lucky.

    Also, those rural folk who want to leave their state or registered domain will have restrictions on food rations, housing, healthcare, marriage etc.

    If you have a Beijing Hokuo, you are a first class citizen. If you have a Lhasa hokuo. Well, you will have a difficult time trying to get govt jobs and join politics. This is primarily meant to keep a citizen anchored in his place of birth. This way he cannot travel to more affluent regions and be discontent about his home town. Such a system does not exist in India.

    Similar to India. How DRDO and HAL control or monopolize nearly everything related to defence. This way small scale and medium scale industries cannot catch up or compete with them.

    The smaller industries cannot compete with larger ones because govt does not provide any major subsidies or tax breaks to them compared to the state owned industries.

    An experienced scientist or manager at a monopoly industry will get paid more than a startup. Most of these monopoly companies in China are state owned. These companies will provide extra benefits in the form of housing loans, employee welfare to the scientists or managers to retain them.

    For eg: You told me one of your children works for a pvt company and gets to stay in a house that costs Rs 2 Lakh/ month paid by the company over the existing salary. I may not be accurate with this, but I guess you get the point. Such benefits increase the difference 5 to 10 times. Then there are extras like Rs 1 Crore medical insurance, company car, company maids, paid vacation, free travel etc.

    The Hokuo system is a designed to have "adequate" workers available throughout the year. Only a designated number get through. So the ones who get through believe they are the lucky ones and will not complain about pay due to fears of losing their permits. It's like how Indian software engineers are dying for the H1B American Visa and still work at half the salary the Americans get paid for the same job. Pretty much the same situation.

    If I am the guy on top, then I want to pay my workers less. Who cares what the workers think as long as they come in time, do what they are told and go back without complaining.

    Sir, like you told me in the other thread. There are certain social dynamics that will go out of hand even if PLA wants to use a hammer. The case in Egypt is due to unemployment and poor lifestyle.

    If you have a maid at home 24/7(because you are rich) and if you have a very high quality of life which improves every year. The maid sees that and notices that she is seeing no change in the quality of her own life. This could lead to discontent. She could attempt thievery or cause unnecessary problems like being cold towards small children of the household while the parents aren't watching.

    In Bangalore, we can openly see the CITY TAXI cab drivers and their discontentment towards other private companies like Easy Cabs and Meru. For eg: If you get out of the station and call Easy cab, the City Taxi drivers will get into a big fight with the easy cab drivers because they charge nearly half that of city taxi drivers(bloated prices though). The Private companies will openly tell you they will not do pick up and drops at railway and bus stations. But these private cabs monopolize every other sector including airport pick ups and drops. Even such small things lead to discontent folk.

    Don't take this article as real ground situation though. Problems like income disparity exist everywhere including India. Only the Hokou system is messed up, but as long as CCP controls everything, there will be little problems for China as a whole.
     
  4. Ray

    Ray The Chairman Defence Professionals Moderator

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    Thanks P2P.

    Very educative.

    Any Chinese posters to comment?
     
    Last edited: Feb 7, 2011
  5. amoy

    amoy Senior Member Senior Member

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    Lots of misreading of Hukou system.

    Besides income disparity (esp. btwn urban and rural residents) is a big problem for China. Nurtured in revolutions/Socialism Chinese are more of equalitarian than Indians, less tolerant of social gaps
     
  6. JustForLaughs

    JustForLaughs Regular Member

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    personally, i feel equality is amazingly overrated. if with your own skill and wit you become very rich and end up being 20 times+ richer than average citizen. i see nothing wrong with that.
     
  7. Ray

    Ray The Chairman Defence Professionals Moderator

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    If the Chinese are less tolerant, then what do they do to show their intolerance. Since it is a single party govt, how does it matter to the Govt regarding intolerance?

    In India, they go on strike, collective bargaining, defeat the incumbent govt in the hustings, raise Cain in the parliament, file PIL cases in the Supreme Courts and then the Supreme Court pulls up the Govt etc.

    In China, that does not happen. So, how is intolerance of the Chinese people reflected on the Govt?

    What is the misreading of the Hukou system? It is a report from Global Times which says so.
     
    Last edited: Feb 7, 2011
  8. Ray

    Ray The Chairman Defence Professionals Moderator

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    In the Western societies it is the individual over the society.

    In the Eastern societies, it is the society over the individual.

    Is is not possible that the individual becomes rich not on his own skill and wit, there are other influence too, like who is related to who, who can influence who, who can cheat the society better and flourish and so on.

    Enron and other US company CEOs did not become rich merely on their skill and wit. They duped the society and people who trusted them!

    Did President Bush become rich on his own skill and wit or was it inherited? Further, if there was equality, then how come he went to Yale and others maybe more deserving could not? Influence was the magic key!

    I agree no society can be perfect, but then should there not be some level playing field?
     
    Last edited: Feb 7, 2011
  9. p2prada

    p2prada Stars and Ambassadors Stars and Ambassadors

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    Socialism being equal is a myth that has never been proven. Nobody in the world is equal. Even Russia has an internal passport system.

    Both India and China have capitalist economies. The Indian Govt does not have a Hukou type system and the world is asking for it's removal in China. The last I heard China has started reforms due to international pressure as of 2001.

    We have caste based system which gives quota to people who have been indentified to belong to a caste that has been at the receiving end of atrocities in the past. This is completely opposite from the Hukuo system which benefits the rich and urban folk, mainly Beijing, rather than the poor and downtrodden.

    The Hukuo system is highly political in nature and does not provide economic benefits to the Rural folk. Hong Kong citizens have to get a "Home Return Permit" in order to work in Mainland China. Look at the word games here. There is to need for it to be called "Home Return." If I was the Mayor of HK dealing with a democratic China, I would have asked for the name to be changed.

    The disparity between rich and poor exists in India too. The only difference is the poor has voice in the govt compared to the situation in China.
     
  10. JustForLaughs

    JustForLaughs Regular Member

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    Enron? didnt these companies get into A LOT of trouble? if you mean become rich by illegal means they should be punished by law.

    well, for Bush, someone in his family ancestor earned it. i dont believe that all men are created equal. far from it, i think everyone is very different with varying degree in ability. you have strengths others dont, they have strengths you dont.

    level playing field, well i think it is to hard to get everyone to have the same starting place. however i do agree with the idea of it. and in a level playing field, i have no grudge against those who shoot on ahead of the average person. in fact, i respect them for it.

    i personally do not feel handouts and welfare is equality. i acknowledge there are cases when even talented individual need some help now and then. but from what i see, this kind of system do more in supporting lazy unproductive people than providing help for talented people in a temporary ditch.

    nothing good can come out of giving unproductive people the means to get more than they deserve. i can only think about the americans when this issue comes up. such a large class of poor lazy people, propped up by welfare and bank loans that they DO NOT qualify for. allowing them to live beyond their means. its against nature in my opinion.
     
  11. amoy

    amoy Senior Member Senior Member

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    no it's not true. for industrialization one of prerequisites is fluidity of laborers. there's no really a Hukou/Visa hurdle as u mentioned. Of course there's protectionism somewhere . for example Shanghai used to grant taxi license to local residents (hukou) only. Besides Hukou is changeable i.e. if I buy a flat (up to a certain size/price) in BBB or prove to have a fulltime job in BBB for a certain period I may apply for relocating my Hukou to BBB. But certainly it all depends as the threshold is high for access to Hukou of some overcrowded Metropolis like Beijing.

    Let me try to de-mystify Hukou monster which is evolving and being reformed all the time (as China is so vast, and Hukou is so complicated it's beyond my knowledge or capacity to give a full view). Most of time Mainlanders don't feel the might of hukou at all. It bothers us when it come to below things

    == Social Security Network: For example my Hukou is in AAA so I'm paying taxes / insurance at AAA although I'm working in BBB. AAA or BBB may have different levels/creteria of benefits applicable for local-Hukou residents only (medicare/minimum wage/pension/unemployment relief alike). But of course it's got to change and be unified. By the way in order to apply for a passport or visa I have to do it at AAA.

    == Education: Most nationwide colleges/universities allocate recruitment quotas to provinces by Hukou. This creates discrimination across different Hukous since competition happens within a province (or equivalent) in favour of places where good school are concentrated. But there're "positive" discriminations too i.e. Students in underdeveloped Guizhou may get reserved quotas to AAA school disproportionate to its applicant size /academic performance. Even for primary school/Junior Middle School hukou is at work -- students with hukou in FFF district can only get admitted to FFF public schools unless they're willing to pay more for XXX private schools in XXX district.

    The stereotype that rural Hukou is disadvantaged is not true nowadays in many developed areas since rural residents have lands and are often entitled to more benefits in the process of urbanization.

    I don't like Hukou system, overall speaking. But hopefully u come to see Hukou as a coin with 2 sides incl. the upside and "necessity" though it's due to be changed constantly thanks to social progress. Other than "anchoring" people to a certain place (hukou) it's also to ensure distribution of resources in a 'fair' and 'efficient' manner in such a huge populace at uneven developing levels across the diversified country.
     
    Last edited: Feb 8, 2011
  12. p2prada

    p2prada Stars and Ambassadors Stars and Ambassadors

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    Perhaps Reforms initiated since 2001 has had it's eventual affect. But what is being done is not enough for the country as a whole.

    I have to agree, it is very vast. The system being vast is primarily a bane and the economics reforms happening with regard to Hukou is not enough as we can see from the criticism in the article.

    You have only listed the disadvantages in an urban setting. An educated person such as yourself can find a way to navigate through the entire spectrum of the muck if given the right push. But, what about the uneducated rural folk? Can you give some more details about that.

    Again this is primarily more in tune with developed areas, as even you used the word "developed areas." The article and my post particularly single out the situation in the undeveloped parts of China, like Tibet and Xinjiang.

    If your country was poor and undeveloped, the Hukou system seems reasonable. Now, with a vast income divide between industrialized corridors and underdeveloped lands, the system needs to get a boot in the rear. However, this means Tibetans and Uyghurs would get easy access to the industrialized corridors. This has massive social and economic benefits. But the CCP's hold will weaken as a result of free exchange of information between the 2 divides. By becoming the second largest economy, there is no longer an upside to the Hukuo system.

    This system has a more concrete hold over mass migrations that we can witness in the country rather than simple obstacles in Social Security and Education in the urban setting. If I was CCP, I would prefer Han Chinese going to Xinjiang and Tibet rather than have Tibetans and Xinjiangese coming to my centre of power. See, how it works. And this is what's happening today.
     
  13. badguy2000

    badguy2000 Respected Member Senior Member

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    here some new phenomenion in CHina:

    1. Hukou of rural area is appreciated while hukou of urban area is devalued.

    Rural Chinese have the right to share freely one piece of land in their village while Urban Chinese can not.

    because the price of land rockets now in CHina,hukou of rural area become quite attractive now. In fact ,lots of urban Chinese start to give up urban hukou

    2.more and more young Chinese leave tier I cities such as Shanghai for tier II / III cities.

    the lifecost of tier I cities rocket because of the rocketing price of house. at the same time, more and more jobs appear in cities in inland CHina ,because infrastructures there have been imporved much and more and more industries are shifted there.

    so, more and more young CHinese give up moving to CHinese tier I cities and look for their fortune in smaller cities and countytowns.
     
  14. Ray

    Ray The Chairman Defence Professionals Moderator

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    Can individual give up hukou or is it for the State to decide?

    if individual at will start deciding what hokou they are from, it will lead to chaos!

    Greedy chaps. Come to urban area, make money and then abandon and go back to the rural areas to make more money.

    This does not sound very constructive to stability!
     

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