China’s Poor Eat Crumbs from the Rich Person’s Table

The new Forbes list of China’s wealthiest 100 was splashed across the country’s newspapers this week, led by a 26-year-old woman worth an astonishing US$16.2 billion.

The list sparked admiration from some readers — and disgust from plenty more. Many people see the widening wealth gap in China as something resembling Latin America’s legendary divide between fabulous riches and dire poverty. While Yang Huiyan is worth more than the GDP of many small countries, the average farmer in the poor western province of Qinghai earns US$280 a year.

After an open letter from 170 senior retired officials accused the leadership of betraying the poor and working class and condoning moral decay, the wealth gap is on the agenda of the 17th Communist Party Congress that begins on Monday (October 15).

The letter articulated the sentiments of millions of people at the bottom of the social ladder who look back with nostalgia on the era of Mao Zedong as more fair, honest and stable. In those days, old communists would say, there was health care for all, a job and a guaranteed place to live — despite the fact that tens of millions of people starved to death during his reign from misguided economic policies.

The richest 10 per cent of Chinese families own more than 40 per cent of private assets, while the poorest 10 per cent share less than two per cent, according to a survey by the Chinese Academy of Social Sciences published earlier this year. China’s Gini Coefficient, a measure of income inequality, has risen from 0.45 in 2005 to 0.496 now. The Gini Coefficient uses 0 to indicate equal income distribution and 1 to represent the largest income disparity. In India, it is 0.33, the U.S. 0.41 and Brazil 0.54.

What’s more, a majority of people seem to regard the rich not with admiration but disdain. A survey in August of 7,900 people by the China Youth Daily and Sina.com found a predominantly negative image of the rich: 67 per cent described them as “low quality,” 57 per cent as “wasteful,” 55 per cent as “rapacious” and 47 per cent as “corrupt.”

Surveys show that most believe the rich acquired their fortunes illegally, through connections and corruption — officials abusing their power and developers obtaining land and permits by bribing government officials. The annual Forbes list invariably also draws the attention of tax authorities, who usually arrest one or two each year for corruption or tax evasion. Seven of the top 10 on the Forbes list are in the property business.

Yang’s fortune, for instance, is derived from a Guangdong-based property company called Country Garden Holdings, founded by her father, Yang Guoqiang, a one-time farmer and construction worker who built it from scratch and transferred his shares to her. Another Shanghai-based analyst, Rupert Hoogewerf, also ranks Yang as China’s richest person, worth US$17.5 billion. Country Garden was listed on the Hong Kong Stock Exchange in April and is calculated to be worth US$30 billion.

“The negative social perception of China’s rich reflects their limited contribution to society,” said Xia Xuelan, a sociology professor at Beijing University. “Billionaires make easy money by turning state-owned assets into their own. Experiencing no hardship, they lack a sense of gratitude and would not think of paying back to society.”

Negative views are fuelled by newspaper stories of rich people in their luxury sedans killing or injuring people in traffic accidents and showing no sympathy for the victims, and of high officials who maintain jewel-draped mistresses in expensive apartments and take them abroad on public money. At the other end of the scale, the nation was stunned, in June, to see slave children working in brick kilns for no pay and little food in Henan and Shanxi provinces. Some as young as eight, they had been sold to their employers for 500 yuan each.

Economists speak now of “three Chinas.” The first is the rich: McKinsey & Company this year estimated that there were 1.5 million Chinese with an annual income of US$50,000, and said their number was rising by 15 per cent a year. They can afford the best goods in the world, own property abroad and send their children overseas, where they can obtain foreign passports.

The second is the middle class – civil servants, intellectuals. white-collar employees of big firms and the owners of small and medium-size firms, who have a house, a steady income and a comfortable standard of living.

The third China is everybody left over, the urban poor who earn a meager living and cannot afford to buy a home and the millions of rural poor.

It was in the name of this “third China” that the Communist Party seized power in 1949. But now, its critics say, it has turned its back on them and implements policies that overwhelmingly favor big business. Wits joke that it should change its name to the Chinese Capitalist Party.

This betrayal of the working class was one theme of the daring open letter, sent on August 20 to party chief Hu Jintao, by 170 retired officials, including former provincial governors, scholars, teachers at the Central Party School and soldiers, including the ex-head of the Air Force.

The letter was posted on a website and received such a strong response that government censors closed the site the next day and summoned the authors to warn them against further expressions of dissent.

The letter said that the policies of Deng Xiaoping were full of mistakes and had opened the door for the rebirth of capitalism in China. It called for the removal from the party constitution of the policy of the so-called Three Represents, a theory of former party chief Jiang Zemin, who allowed private businessmen into the party. The policy states that the party should represent the “development demands for the advanced productive forces of China; the orientation of the progress of an advanced Chinese culture; and the ultimate interests of the broad masses.”

“This bourgeois thinking puts money above everything else and is creating unchecked egotism. As the bourgeois class grows, so workers and farmers become weaker and weaker. Opposition to this bourgeois ideology is becoming more and more fierce.

“If China had stuck with Mao Zedong’s economic policies, the country’ s economy would still go up, just not as fast,” said Li Chengrui, 85, former head of the National Bureau of Statistics and one of the prime movers behind the letter. “Workers are exploited by their employers and are paying the price of environmental degradation for developing so fast.”

The letter will not change policy at the Congress but is a warning to party leaders of the anger and resentment felt by many party members and millions of common people which it will ignore at its peril.