Introduction
The economy of China has undergone a significant transformation from agriculture to a thriving power, with an average annual growth rate exceeding 9%, witnessed by its population of over 1.4 billion (Morrison, 2019). However, this growth came about with the development of income inequality among the citizens. Income inequality usually occurs in a country if specific individuals or groups have notably higher income levels than others (Manduca, 2019). The critical issue of income inequality persists in China due to variations in education and skills, regional disparities, and the increasing gap between metropolitan and rural regions. This issue can threaten economic growth and social stability, making effective policy solutions necessary. This paper focuses on examining the history and development of China while exploring the causes and effects of income inequality. Additionally, potential policy solutions will be provided.
Comparison with Other Countries
The issue of income inequality impacts countries globally as a common concern. However, among other countries worldwide, the United States shows one of the highest levels of income inequality. For instance, Data from the World Inequality Database highlights a substantial decrease in the portion of total income attributed to individuals within the lower half of income earners for the past forty years. In 2019 only 85% of the world’s income went to the bottom 50% of the global population according to the database, which decreased from 10.4% in 1980 (world inequality database, n.d). This means that over time the gulf between wealthy and low-income people has widened, and in 2019 the top 10% of revenue generators amassed 54.1% of global income compared to 44.4% in 1980.
Using the Gini coefficient metric to measure income inequality levels of highly-developed countries shows that income inequality in the United States has been progressively worsening over time compared to others. The United States has been found to possess one of the highest rates. The Gini coefficient ranges from 0 to 1 and signifies the perfect parity or perfect disparity. The Gini coefficient of the US was 0.434, according to the OECD’s report in 2017, which is higher than the average of 0.315 for other OECD nations (Council on Foreign Relations, n.d.). Compared to most wealthy countries, the U.S. is more inclined towards the prosperous class in distributing income.
The distribution of income among diverse groups in a nation is worth comparing. This divergence will be emphasized as the top 1% of earners in the United States earned roughly one-fifth of all income in 2018, with only about a tenth going to the lowest-earning half—nations (Council on Foreign Relations, n.d.). Contrarily, in France, only 1% of people earned as much as 11%, while about half of the population received a collective income of approximately 22% (Santacreu & Zhu, 2021). When assessing income inequality across different countries, one could examine the variation in earnings between someone placed at a specific income distribution versus another person at an equal percentile. To give you an idea, in 2018, a person in the 90th percentile of earnings distribution based on location within the United States made approximately $110000 (Schaeffer, 2021). This amount is nearly double what someone at the same percentile in France would make with only $55000. Someone who earned in the 10th percentile of income distribution in the US only made $14k per year. However, a person earning the same amount in France would make $16k instead (Schaeffer, 2021). The United States experienced lower mobility and higher income disparity during the same time as other highly-developed countries.
The Gini coefficient measuring income inequality scored 0.465 in 2020, as the National Bureau of Statistics of China reported (Textor & 8, 2022). The Gini coefficient is comparatively higher here than in developing nations like India and Brazil. China and the United States share a common feature of income inequality among high earners, resulting in wealth concentration. The top 1% of income earners in both countries disproportionately earn the national income. While income inequality has varying causes in these two countries, income inequality has been rising in the United States due to several factors, such as deregulation, globalization, and declining unionization. The differences between rural and urban areas and challenges with education and corruption contribute to income inequality in China.
Globalization and income inequality in China
Expanding trade and communication have increased interdependence and interconnectedness among countries’ economies and societies, commonly known as globalization. Globalization has led to considerable economic progress and development in numerous countries but has also affected income inequality in some regions (Munir & Bukhari, 2020). As a result of globalization, China now displays a blend of rapid economic growth and increasing income inequality, making it an exemplary country. The inclusion of China into the global economy has paved the way for novel economic sectors and an impressive boost in foreign investment, creating jobs and wealth. However, the economic advantages have not been distributed equally, which has resulted in a more significant distinction between the wealthy and the disadvantaged.
The World Bank report released recently gauges income inequality through the Gini Coefficient. China’s Gini Coefficient rose from 27.7 in 1980 to 38.2 in 2019, indicating a growing gap between the rich and the poor (FRED, 2022). Globalization worsens income inequality in China, according to the report’s findings. Globalization and the neglect of certain regions, such as inland areas of China, by concentrating foreign investment on specific regions like the coastal ones has led to income inequality. As a result of the uneven development pattern, which favors coastal areas over other regions economically, there is more growth and higher income in coastal areas. Moreover, the spread of global influence has resulted in unemployment among employees from conventional sectors like farming, which has also increased the income disparity between residents of cities and the countryside.
Several proposed solutions mitigate globalization’s impact on income inequality in China. Promoting infrastructure and social services through investments in less-developed regions is one possible solution to achieve inclusive growth. Another solution is encouraging innovation and entrepreneurship to create more job opportunities and increase incomes. Policies that provide social protection and support workers’ rights can also help reduce the negative impact of globalization on income inequality. In summary of the above points regarding globalization and its effects on China, one may conclude that although it has resulted in substantial economic growth and progress for the nation, it has also contributed to income inequality. Unequal development and increasing income disparities have arisen due to the concentration of foreign investment in specific regions and the displacement of workers in traditional industries. To mitigate the negative impact of globalization on income inequality and promote more equitable development in China, it is necessary to implement policies that promote inclusive growth and social protection.
Social and Economic Costs of Income Inequality in China
Income inequality negatively impacts Chinese society with various social and economic costs. Initially, it disrupts social unity while augmenting the division among affluent and deprived individuals, resulting in societal unrest leading to disagreements and aggressive behavior (Ma et al., 2019). Decreasing trust in government institutions can be seen through the rising crime rates and social unrest—additionally, unequal distribution of wealth results in uneven access to necessary services like education and healthcare. Wealthy people enjoy superior-quality benefits, while the less rich have restricted options (Ma et al., 2019). The absence of quality education and healthcare leads to a never-ending cycle of poverty for low-income households. Consequently, they reduce their chances of improving their social status.
Another concern is how income inequality hampers economic growth. A decrease in consumption levels among those with lower incomes negatively affects the demand for goods and services. Hence, establishments may find it challenging to develop, resulting in fewer job prospects and higher unemployment rates, thereby worsening the problem of unequal distribution of wealth. According to a report from the World Bank on income inequality in China, slower economic growth and political instability could result from this issue and hamper long-term development (Koh et al., 2020). Addressing income inequality in China will contribute to its social and economic development and stability. Social workers must advocate for the right policies and strategies to combat income inequality in China effectively. Collaborating with community organizations and civil society groups to increase knowledge of the problem and rally assistance for policy modifications is possible. Social workers offer help and advice for enhancing social and economic welfare to those affected by income inequality.
Past efforts to address income inequality
Historically, China has employed various policies and strategies to narrow the rich-poor divide concerning income inequality. Providing job security and benefits for all workers was among the earliest policies implemented through the Iron Rice Bowl system (Kosydar, 2019). This policy successfully reduced income inequality during the initial years of the People’s Republic of China but was abandoned in the late 1970s. As it moved towards a market-oriented economy in the 1980s, China implemented policies encouraging private enterprise and foreign investment. The outcome of this was considerable economic growth and reduced poverty levels; however, it also played a role in increasing income inequality. The government introduced several policies designed to redistribute wealth to combat this issue. These included progressive taxation and social welfare programs.
To address the issue of income inequality in China in the modern world, several policies have been implemented by the Chinese government. One such initiative is the targeted poverty alleviation program. This program aims to reduce poverty through targeted education, healthcare, and infrastructure investment. Measures implemented by the government to foster inclusive growth include tax relief for small businesses and increased social welfare expenditures (Ma et al., 2019). In addition, measures have been implemented by the government to tackle the gap in earnings between urban and rural regions. This includes increasing city minimum wages and investing in rural infrastructure and education. The government has revealed its intention to minimize income inequality by raising public spending on education, healthcare, and social welfare. The implementation of policies is also planned to improve income distribution and social mobility.
Although policies are implemented to address the issue of income inequality in China, there are still worries that they may not be adequate. Establishing a more just society might require more significant changes in structures. Addressing income inequality while maintaining social stability and pursuing economic growth could prove difficult for the government. Henceforth, the continuous evaluation and adaptation of policies and strategies are required to tackle this intricate problem efficiently. The income inequality issue in China persists despite these efforts, and there is a continuous discussion about the most effective policies and strategies to resolve it.
Reasons for the Failure of Past Ways of Dealing with Income Inequality
Despite implementing policies like progressive taxation and social welfare programs to combat income inequality in China for several years now. In certain regions of China, where a large disparity exists between the wealthy and impoverished populations, high levels of income inequality can be observed (Mazzocco, n.d). Numerous contributing factors caused past efforts to decrease income inequality in China to be unsuccessful. The close tie between political and economic impact is an important contributor. In China, economic power is closely linked to political power, giving room for a small group of people holding both types of power to concentrate wealth. Implementing policies to address income inequality has become challenging due to the concentration of power. Those in power may resist or undermine such policies.
Also, past policies have failed partly because they prioritized economic growth over other factors, and the norm is to prioritize economic development over social welfare and income distribution in policies (Chugunov et al., 2021). Wealth and income disparities have widened, particularly in urban areas where the economy has grown the most. Moreover, in China’s context, societal and cultural factors have also contributed to the unsuccessful attempts to tackle income inequality because the cultural emphasis on preserving one’s image and position in society can make individuals unwilling to address or admit the existence of income inequality. Recently, though, there has been an increase in the acknowledgment of the harmful effects of unequal income on social unity and stability in China, and to address the income inequality problem and narrow the wealth gap, the government has implemented certain policies, including tax reforms and more expenditure on social welfare programs.
The root causes of income inequality in China, which include the link between political and economic power, should be addressed by policymakers, which should emphasize social welfare instead of only economic growth and consider cultural factors that could impede efforts to tackle income inequality. Addressing these factors with better policies can enable China to promote greater income equality and social justice.
What changed to make this problem worse?
Income inequality in China has become worse due to several contributing factors. A wealthy class consisting of entrepreneurs and investors emerged due to the country’s rapid economic growth, which has been one of the most significant factors. Moreover, stagnating or declining wages among low-skilled workers have exacerbated income inequality (Mazzocco, n.d). To achieve market orientation and industry deregulation, many state-owned enterprises were privatized. While allowing private investors and entrepreneurs to generate wealth opportunities has also resulted in wealth accumulation among a select few. The globalization trend and China’s acceptance of foreign trade and investment are also at fault for the growing income inequality. While it has provided considerable economic advantages for the nation, it has caused many unskilled laborers to lose their jobs and reduced labor protections and standards.
Moreover, due to urbanization, regional inequalities exist in China as urban places enjoy better healthcare, education facilities, and higher income than rural areas (Chugunov et al., 2021). The economic upturn ignoring numerous rural inhabitants has led to an increase in income disparity. In recent decades income inequality in China has worsened due to economic, social, and political factors.
Implications for future social work practice
Future social work practice could have significant implications if income inequality persists in China. To tackle the complex and diverse problems stemming from income inequality, such as poverty and social exclusion or marginalization, social workers must undergo proper training and preparation. Providing support and advocacy to communities and families impacted by income inequality requires close collaboration between social workers. One possible approach to promote economic opportunity, social inclusion, and community development is to develop and implement programs and services. Social workers must also advocate for policies and strategies to address income inequality (Chugunov et al., 2021). This can involve promoting progressive taxation or supporting public subsidies and targeted programs to alleviate poverty. Social workers are indispensable in promoting policy change by encouraging public backing and highlighting how income inequality adversely affects individuals and society. Working collaboratively across government agencies and private sector actors with the involvement of civil society is necessary to tackle income inequality. Social workers undertake two vital responsibilities advocating for policy change and supporting communities.
Advocating for policy change
To support this policy, I would interact with national-level politicians and policymakers. Presenting data and research on the negative impacts of income inequality to government officials and legislators during meetings can help advocate for policy solutions. In addition to this effort of mine toward tackling income inequality in China, I would like to engage with civil society organizations and social movements. We can magnify our voices and push policymakers to act by working with these groups. I would employ different instruments, such as research and analysis, to promote policy change to provide evidence-based recommendations.
Moreover, I would arrange public awareness campaigns to increase income inequality awareness. In addition, leveraging social media platforms could help me gather more public support and generate momentum for the policy (Chugunov et al., 2021). Further, I would advocate for integrating social workers and other experts into the policymaking process to guarantee that policies are backed by evidence and informed by the experiences of those most affected by income inequality. We can create a more equitable society in China by working towards it by engaging with policymakers and utilizing various advocacy tools.
The Role of Technology in Advocacy
Addressing income inequality through policy change can greatly benefit from using technology in advocacy efforts. To spread information effectively, increase awareness, and impact policymakers, requires mobilizing support through engagement. Social media platforms provide a means for using technology. Mobilizing support for policy change is possible by sharing information about income inequality and its impacts through social media. Using social media platforms, we can organize protests and rallies to create more awareness about the issue. Utilizing online petitions and campaigns, technology can be implemented. Using these to collect signatures demonstrates support for changing policies. Taking action on the issue may also be influenced by online campaigns that pressure policymakers. The use of technology can also aid in enabling communication between policymakers and advocacy groups. To demonstrate support for policy change, contacting elected officials using email and online messaging platforms can be helpful (Munir & Bukhari, 2020). The utilization of technology can assist in overseeing and assessing policy decisions and their impact on income distribution, which makes it easier for advocacy programs.
Conclusion
Addressing income inequality in China requires policies and strategies that target its underlying causes, such as enhancing educational and employment opportunities and improving social welfare programs. Civil society organizations and technology must be involved in national implementation to support effective advocacy efforts. Social workers also have a crucial role in supporting those impacted by income inequality, participating in policy development, and providing counseling and case management services. Future research should prioritize evaluating current policies and developing new approaches to address China’s challenges. Proactive measures must be taken to protect social welfare and the well-being of individuals and communities. Social justice and equity in China can be significantly advanced by efficiently collaborating and using technology and resources.
References
- Textor, & 8, D. (2022, December 8). China: Gini coefficient 2021. from https://www.statista.com/statistics/250400/inequality-of-income-distribution-in-china-based-on-the-gini-index/
Chugunov, I., Pasichnyi, M., Koroviy, V., Kaneva, T., & Nikitishin, A. (2021). Fiscal and monetary policy of economic development. European Journal of Sustainable Development, 10(1), 42-42. https://doi.org/10.14207/ejsd.2021.v10n1p42
Council on Foreign Relations. (n.d.). The U.S. Inequality debate. Council on Foreign Relations. https://www.cfr.org/backgrounder/us-inequality-debate
Gini index for China. FRED. (2022, April 12)., from https://fred.stlouisfed.org/series/SIPOVGINICHN
Home – wid – world inequality database. (n.d.). from https://wid.world/
Koh, S. G., Lee, G. H., & Bomhoff, E. J. (2020). The income inequality, financial depth, and economic growth nexus in China. The World Economy, 43(2), 412-427. https://doi.org/10.1111/twec.12825
Kosydar, C. R. (2019). The Iron Rice Bowl and Foreign Investors'(In) Security: An Analysis of Corporate Governance Risks to Minority Shareholders in Chinese Listed Companies. Rutgers Bus. LJ, 15, 1.
Ma, B., Cai, Z., Zheng, J., & Wen, Y. (2019). Conservation, ecotourism, poverty, and income inequality–A case study of nature reserves in Qinling, China. World Development, 115, 236-244. https://doi.org/10.1016/j.worlddev.2018.11.017
Manduca, R. A. (2019). The contribution of national income inequality to regional economic divergence. Social Forces, 98(2), 622-648. https://doi.org/10.1093/sf/soz013
Mazzocco, I. (n.d.). How inequality is undermining China’s prosperity. CSIS. from https://www.csis.org/analysis/how-inequality-undermining-chinas-prosperity
Morrison, W. M. (2019). China’s economic rise: History, trends, challenges, and implications for the United States. Current Politics and Economics of Northern and Western Asia, 28(2/3), 189-242.
Munir, K., & Bukhari, M. (2020). Impact of Globalization on income inequality in Asian emerging economies. International Journal of Sociology and Social Policy, 40(1/2), 44-57. https://doi.org/10.1108/IJSSP-08-2019-0167
Santacreu, A. M., & Zhu, H. (2021, December 9). How does U.S. income inequality compare worldwide? Saint Louis Fed Eagle. from https://www.stlouisfed.org/on-the-economy/2017/october/how-us-income-inequality-compare-worldwide
Schaeffer, K. (2021, May 27). 6 facts about economic inequality in the U.S. Pew Research Center. from https://www.pewresearch.org/fact-tank/2020/02/07/6-facts-about-economic-inequality-in-the-u-s/
write