February 26, 2004

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Mind the gap

All countries suffer an income gap. It is a measure of how much richer the rich are compared to the poor. Many see a wide gap as a symbol of a society with large inequalities, massive disparities in opportunity and a potential catalyst of social unrest. For example Zimbabwe has a very high income gap, when measured as the ratio of average urban earnings versus average rural earnings. Want to take a guess at the highest urban-rural gap country in the world?

Communist China.

It's not just the income disparity as China's Eastern coast and major cities roar ahead and leave the vast population still in rural areas behind. It is not the massive move of people from rural areas to cities, creating slums and putting pressure on those cities' services and infrastructure. It is not the lack of access to medical care and social security that farmers lack compared to their city-slicking counterparts. It is that the CCP is scared witless what might happen if the 60-70% of the population still in rural areas realise they are getting the raw end of the deal. That the CCP, who at least in theory are meant to be the peasants' party, have actually left them behind.

The CCP know this is one of their biggest problems and are making baby-steps towards property rights for farmers. From the SCMP

The government has been granting peasants 30-year leases on their land and since 2002 has allowed them to lease their land rights for cash. However, no transaction has taken place because local cadres still have the right to "re-adjust" land holdings if peasants leave their individual allotment to the care of friends or relatives to seek work in the cities.
"Use it or lose it" isn't a great way to establish property rights. The CCP know this is disparity is one of the biggest threats to its rule but it seems they have little idea what to do about it.

And so it turns out the biggest gainers from the Communist Revolution in China have been the capitalists and the biggest losers the rural poor. Ironic.

posted by Simon on 02.26.04 at 09:32 AM in the




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Tracked: February 27, 2004 10:39 PM


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