Double Trouble for China
Image Credit: Wikicommons

Double Trouble for China


China is among the least free societies in the world and suffers from a dangerously high rate of income inequality according to two reports this week from Freedom House and the Chinese government’s National Bureau of Statistics (NBS).

China was home to over half of the global population who lived in “not free” societies in 2012, according to Freedom House’s annual freedom index, which was released on Wednesday.

“The number of people living under Not Free conditions stood at 2,376,822,100, or 34 percent of the global population, though it is important to note that more than half of this number lives in just one country: China,” the introduction of this year’s Freedom of the World report stated.  

Freedom House defines a country as “not free” when “basic political rights are absent, and basic civil liberties are widely and systematically denied.” It gave this label to 47 countries around the world, 24 percent of the total polities.

An additional 58 countries are only listed as “partly free” while Freedom House considers 90 nations as free, 46 percent of the total. In the Asia-Pacific, 43 percent of countries were listed as free, 36 percent were labeled partly free, and 21 percent were labeled as not free. Of those in the latter category, North Korea, Uzbekistan, and Turkmenistan were among the seven countries Freedom House included in its “worst of the worst” category meaning they got the lowest possible score for both political rights and civil liberties.

Although China as a whole wasn’t part of the “worst of the worst” grouping, Tibet was one of the two territories included in the survey that met the requirements for the “worst of the worst” ranking. Furthermore, Freedom House said that China was one of the six nations and territories that scored only “slightly above those of the worst-ranked countries,” receiving a seven, the lowest possible score, in the political rights category and the second lowest score, six, for civil liberties.

More embarrassing for China was the unfavorable contrast Freedom House drew between Beijing and its neighbor Myanmar.

“For all its lingering problems, Burma has now surpassed China on both political rights and civil liberties,” the report said.

Myanmar was given a six in terms of political freedom and a five in the category of civil liberties.

Although China remains far ahead of countries like Myanmar economically, not everyone in China is sharing in the spoils.

That is if you believe the Chinese government, which released data on the country’s Gini coefficient for the first time since at least 2000. The Gini coefficient is an internationally recognized measurement of income inequality in a country where zero equals perfect equality and a score of one means perfect inequality (one person holding all the wealth).

China’s Gini coefficient has hovered between 0.47-0.49 since 2003 Ma Jiantang, director of the National Bureau of Statistics (NBS), told a press conference in Beijing on Friday. The last time Beijing released Gini data was in 2000, when it said the number was at 0.412.

"A Gini coefficient between 0.47-0.49 shows that the gap in income distribution is relatively large,” Ma reflected.

By way of comparison, the United States, which has one of the highest levels of income inequality in the industrialized world, has been estimated by the OECD to be around .37 after taxes. Other organizations like the UN place the number higher at 0.4.

Breaking down the numbers further, Ma said there was a three-fold gap in wealth between rural and urban workers, and a four-fold gap between workers in the most and least lucrative industries, Reuters reported.

Many economists and international organizations believe anything above 0.4 risks creating social unrest.

It’s worth noting that Deng Xiaoping and his subordinates recognized that their policy of reform and opening up would create greater income inequality at least in the short-run. Zhao Ziyang, who as Premier from 1980-1987 was in charge of the daily implementation of China’s economic rebalancing, was a particularly strong advocate of the need to allow income for China’s coastal regions rise faster than inland provinces.

That being said, the high level of income inequality threatens social stability and impairs the government’s ability to rebalance the economy towards one built more on domestic demand than exports.

The one bright spot in Ma’s press conference was that inequality appears to have peaked in 2008 when the Gini was at 0.491, and declined each year since reaching 0.474 in 2012. This contradicts the NBS' statements in 2011, however, when it said—without stating actual numbers— that income inequality had risen slightly in 2011 compared to 2010.

Still, the new leadership’s efforts to rebalance the economy will be made all the more difficult by the declining size of the labor force. At the Friday press conference Ma said the labor force had declined in absolute terms by 3.45 million workers in 2012 relative to the year before. He cited the one-child policy as the cause of this drop and passionately advocated this be reversed.

China’s 5th generation leaders that took over in November are unlikely to initiate the kind of tough, visionary policies needed to navigate the country’s mounting difficulties, Freedom House suggested in its report this week. The annual survey said those hoping for “meaningful political reform were dealt a serious blow” when the CCP unveiled the fifth generation leadership, “whose members have generally built their careers on hardline policies.” They'll need to do better in economic reform.

Zachary Keck is assistant editor of The Diplomat. He is on Twitter: @ZacharyKeck.

February 6, 2013 at 18:39

As an American living in China for 8 years, things are not that bad.  Researcher's need to stop analyzing with political microscopes.

Aftab Kazi
February 5, 2013 at 21:07

Does anyone really trust Freedom House analyses. Many have had been wrong in the past, particularly about Central Asia, which I am personally familiar with. Since FH analyses are officially fananced, they, in fact, create misperceptions among our USA policy recomending and formulating community. Forget about China. One does not need a doctorate to understand that governing more than a billion people necessitates an iron hand. By the way, countries, who have actually developed, infrastructures were led under high handed rulers. Descendents are reaping rewards. Let us be hinest to ourselves and to Chinese.. 

Kim's Uncle
January 30, 2013 at 04:18

This is why china will never become great power or much less a “super” power! All sino nazis have delusions of grandeur like their leader Mao but reality is reality! That’s why sino nazis state is so mercilessly mocked and ridiculed! You can’t blame them for dreaming! LOL

January 28, 2013 at 07:42

Excellent John Chan!

January 24, 2013 at 13:01

Bravo :-) Loved the sarcasm big time.
Thumbs up

Phunsukh Wangdu
January 24, 2013 at 02:17

CCP China's intention to the world. It's intention is to dominate Asia with might and fear. Suppress trade and freedom of navigation so that it can corner the whole region and be forced to trade with CCP China. Intimidate and coerce small nations into giving up it's natural resources and territory. Create a communist Empire so that Pultibro leaders will remain in power for years to come. create a Communist Dynasty that will last a thousand years, project to the world that China is a Draconian world power.. I trust the Chinese or Chinese people i am able to trade with them, what I don't trust are your communist leaders and hawkish warlords.

C C P supporter
January 23, 2013 at 03:54

This is another article from the west to demonise China. Here are the undispute facts from China today:
1) All CCP and their families members are under strict Court order to drink import bottle watter to leave all CHLORIDE treated tap water for our dear peasants who unable to purchase toothpaste due to the secret CIA on going blockage against China.
2) All CCP and their families members are order to stockup import baby milk to free up local made Melamine Milk which contain HIGH PROTEIN for our dear peasant babies.
3) Our Dear former President Hu Jintao earned a modest  US $10,633 per year, it means $866 per month, $220 per week and $44.30 per day. He and his wife made twice a day trip to the local Noodle Bar, Bejing to meet and eat with everyday peoples. He even bought us a cup of tea time after time from his limited retirement bugget. Any fabrication to his family fortune of 1.67 Billion Pounds is baseless. He made it clear to all local people that he had nothing to do with his family fortunes. They had accumulate those fortune from the "Ancient time"  it is purely based on luck, friends helping friends and hard work.
4) Bejing air was polutted by millions of luxury /powerful V8 and V12 Japanese/Western cars driving around. We areenforcing all CCP member to drive Local made 2014 Chery which run on Bejing's tap water to produce zero toxic gases.
Remember our great Mao Zit Dong slogan ? "Without the Communist Party, There will be no Melamine Milk for our Infants"

January 22, 2013 at 23:58

you dip-sh*t don't like what you see here, you can leave and BTW, go back to your beloved China if you don't like the West too. In China, you can dip-sh*t everywhere, no problem.

January 22, 2013 at 23:55

Don't like what you see here, you can leave and BTW, go back to your beloved China if you don't like the West too.

January 22, 2013 at 23:55

Very well said. must have heard this in one of your classes in China! China isn't rich in natural resources it's dependent on energy and doesn't have the population to innovate. That would change if the country was open but to open a need in the political format is needed but who wants that? Definately not Beijing! So China is in a very difficult situation untill the regime doesn't change all China can do is export cheap goods to the rest of the world and with the profit move the national economy. 

January 22, 2013 at 18:30

The west has a much bigger inquality than China I don;t knwo what this writer is talking about.
In China we don't measure income inequality the same ways.
When it comes to writing about other countries, Diplomat usually misrepresent issues. It's best to write about something they know more about close to home.

January 22, 2013 at 18:24

Why does the Diplomat continue to write crappy articles about China? bunch of right wing hate mongering criminals. Either you smarten up or fire your current bogus journalist.
Or better, I think it time to look for a better site that is a little more serious.

January 22, 2013 at 12:16

China's Gini coefficient, a gauge of the wealth gap, reached 0.61 in 2010, much higher than the international warning line of 0.4.

January 22, 2013 at 11:41

Best post you ever made JC. Just displays in all its glory how much of a genuine nutter you are.

January 22, 2013 at 09:23

Except for your 'naked' officials of course. Staying in China isn't good for them. Also, the Chinese who have been leaving to migrate to other countries as well, for a variety of reasons. And don't forget the dissidents who aren't welcomed by the CPC.

david z. rich
January 21, 2013 at 22:52

histortically, the chinese have been a dynamic and innovative people–dictatorships shuch as in china today can nly cramp their innovativeness.

January 21, 2013 at 11:41

"By way of comparison, the United States, which has one of the highest levels of income inequality in the industrialized world, has been estimated by the OECD to be around .37 after taxes."
Why quote after tax figure instead of the real US GINI number which is .47, which is same as that of China.  If you use after tax GINI for US, should you use the same for China.   Talk about using fuzzy math to make argument better.
In fact, according to same calculation by CIA fact figure, US has same GINI as that of China.

January 20, 2013 at 10:14

The solution for China's economic inequality is to phase out exports and FDI and develop the domestic economy based on the advancement of indigenous technologies, the urbanization of the rural residents and the energy self-sufficiency.  Exports can only be maintained by cheap wages and cheap yuan.  This means that if wages increased then exports will become too expensive to compete against other exporting countries with lower wages.  Therefore, the only way to raise the wages is to shift to domestic development to produce goods and services for domestic consumption where increasingly higher productivity can be matched with increasingly higher wages; and wages are not constrained by cheap foreign wages but based on productivity only.  And productivity can be increased by the advancement of indigenous technologies to make tools and machines used by Chinese workers increasingly more efficient.  The urbanization of the rural residents will allow most of the Chinese to work in the urban areas to produce goods and services for the Chinese people to consume instead of being exported.  The urban workers can also be paid higher wages commensurate with their higher productivity.  The higher value of the RMB or the yuan will also keep the prices of goods cheaper and so increase the purchasing power of the Chinese people.  As most of the rural residents are urbanized, the remaining farmers can have bigger plots of land to farm thus increasing their output and income.  As the incomes of the farmers increase there will be less disparity between the urban and rural areas thus eliminating the inequality amongst the Chinese population.  Also as the productivity of the Chinese people increases there will be less difference between the richest and the poorest. 

John Chan
January 19, 2013 at 06:32

Regardless of what people say, China, to the Chinese, is the most happiest place on earth. It is a paradise in fact to our working classes. Soon China will be a superpower in a few years. The Westpac and its lackeys will be destroyed.

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