The rapid growth of Chinas economy over the past four decades has been greeted with largely unquestioned assumptions that increasing affluence would lead to a happier, wealthier more equitable society. Have the benefits of Chinas economy growth been distributed equitably and what are the social implications of this modernization process?
Despite its remarkable economic growth which has been consistently high for a prolonged period of time, it has been unable to distribute the benefits of this growth to the wider masses in the country. This report looks to examine how China’s incredible economic growth and its rise as a global power has been manifested for the people of China. Part One frames this issue through popular measures such as the gini-coefficient and considers its trend. Part Two is centered on an analysis of the consumption density function curve and its shift to reflect a higher proportion of consumption by the wealthy. It is argued that this mode of analysis is superior to nationally aggregated figures as it establishes a relationship between population shifts and consumption levels. Part Three explores the theoretical underpinnings of growth-pursuant poverty reduction, namely the ‘trickle-down effect’. Attention is given to the concept of the trickle down and its intersection with Chinese domestic policy. Part Four highlights the notable divide between urban, rural, coastal and inland regards for growth and development and considers both the reasoning and implications of this dichotomy. Part Five looks at gender discrimination and the one-child policy throughout China and highlights how economic growth has in many ways exacerbated this problem. The problem of gender division is considered through the theme of rural-urban difference and how this is contributing to the brain drain effect.
In order to frame the inequality debate in China, it is necessary to consider the ideological and political underpinnings of what is fast becoming the largest economy in the world (Wong 1992). Communism as a political system has deep roots in egalitarianism and the Chinese Communist revolution was no exception. ‘It was a basic principle of the early Communist Party that inequalities ought to be eradicated and the power and privilege of elite groups should be dismantled. Today in China the situation is very different. Farmers and rural people no longer have the support of the central state in their grievances against powerful forces — land developers, factory owners, power companies’ (Little 2009). It seems market liberalization and globalization have taken precedence and this is having negative implications for the widening gap between the poor and the wealthy. The most common statistical measure for quantifying this widening of wealth is the gini-coefficient. The Gini coefficient lies between 0 and 1, with perfect equality at zero and income disparity worsening as the Gini coefficient approaches 1 (Cai 2012). Alarmingly, China’s gini coefficient has increased from 0.382 in 1988 to 0.48 in 2007. This value is not only outside the 0.4 mark, the point where inequality begins to cause social instability, but it also demonstrates that inequality is worsening in China.
While the gini-coefficient is a recognizable, effective tool for macro-comparison, its single figure value fails to accurately capture the intra-disparities of any particular sample. The below graph demonstrates the relationship between population density and consumption volume. Above the X-axis represents a spectrum of the population’s wealth, with the height of the curve indicating the number of people living at that particular level of expenditure. The height of the curve below the x-axis (measured as a negative value) is indicative of the volume density of consumption by all those living at that particular wealth level. Immediately when we look at this graph, we notice that the population curve is positively skewed indicated by the right hand tail, and that the consumption curve is negatively skewed indicated by a significantly heavier weighting on the right hand side. The area to the left of the dotted blue line represents those living on less than $2/day. You can see that despite China’s extreme growth this area still constitutes a massive portion of the total population and has not changed as substantially as the right hand (high wealth) side of the curve. (The World consumption density function curve is also shown to act as a comparative tool).

The theory behind pursuing growth to reduce poverty is centered on the ‘trickle down effect’. The theory asserts that the accumulation of wealth by the rich is beneficial for the poor because they will receive a portion of this wealth as it trickles down the social ladder (Aghion & Bolton 1997, p. 158). The rural reforms launched in the late 1970’s by China’s leaders were a clear indication that there was to be a newfound deviance from the commitment to egalitarianism (Rozelle 1996). This ideological progression was manifested through a series of concrete policy actions in the 70’s, 80’s and 90’s. The implementation of the East Coast first policy, initiating the industrialization of rural areas, commencing financial reforms and the establishment of Special Economic Zones, signaled a policy shift in pursuit of economic growth (Rozelle 1996, Jian et. Al 1996, Tobin 2011). Chow (1992) argues that the pursuit of the trickle down effect has been a failure in China and has only facilitated the mass accumulation of wealth for a select few.

Jian, Sachs & Warner (1996) highlight the disparity between coastal and inland rural regions. They highlight how coastal regions experienced higher growth in all of the three main economic stages; central planning (1952-1965), the cultural revolution (1965-1978) and market oriented reforms beginning in 1978 (Rozelle 1996). The below graphs indicate the different levels of growth between different regions of china between 1978 and 1992. What these graphs demonstrate is that the growth experienced by china over the period has not been distributed equally and that by omitting the national aggregation of growth, there are significant disparities. Yang (1999, p. 309) argues that the rise in regional disparity has resulted from increased urban subsidies, investments and credits, which have effected higher inflationary taxes on rural earnings’.

China’s quest for economic growth and capital accumulation, coupled with the one-child policy is having profound implications for gender imbalance. In just fifteen years, China will have thirty million more men of marriageable age than women (Hudson & Den Boer 2002) Feminist readings of this phenomenon highlight the causal link between the social structures which favor male wealth accumulation and gender discrimination. Lui Bohong, vice director of the women studies institute under the All-China Women’s Federation, highlights the widespread problem of gender discrimination throughout China but argues that it is more common practice in rural areas. Recent reports indicate that in provinces such as Guangdong and Hainan the ratio of boys to girls has escalated to 1:1.4 or 40% more males born than females (Chow 1992). According to Zhang Qing, the population researcher of the Chinese Academy of Social Sciences, only 5 of China’s 29 provinces are within the worlds average sex ratios and almost all of these are urban or coastal provinces. (Rozelle 1996). There is no doubt that the implementation of the draconian one child policy has catalyzed the pre-existing social preference for males however is cannot be prescribed as the only factor. ‘Increasing economic and social inequalities in post-Mao China may have worsened the social stratification in male marriage. In a country with a growing gap between rich and poor, and between the urban areas and the countryside, many young women in rural areas aspire to marry a man who has a stable job, is well-educated, and preferably in the cities’. The broader implication here is that the economic growth experienced in China has not only failed to lead to a more equal distribution of wealth between males and females but has further exacerbated Chinas economic and social structures of male dominance.
According to some authors (Aighon & Bolton 1997, China’s hyper-speed path to economic development presents negative implications for social stability. According to the World bank, a gini-coefficient of 0.6 and greater is indicative of economic and social instability (Ren 2011). Subsequently, it is argued that a failure to address the continually rising income disparity between urban and rural and coastal and inland will lead to imminent social stability danger (Ren 2011, Wong 1992). One such bi-product of this regional income disparity is rural-to-urban migration. While this migration provides opportunities for poorer rural workers to find urban jobs, the pay is persistently low due to an excess in supply. Furthermore the mass migration also creates social instability through issues such as crime, sanitation and health problems and environmental pollution (Ren 2011). This migratory phenomena has been catalyzed by the rise of privately owned corporations which are increasingly replacing the centrally planned industries established in rural areas (Rozelle 1996).
By observing the intersection of this rural-urban migration and the pronounced gender imbalance, it is apparent that there is a significant brain drain away from rural areas. This rural brain drain to cities has tended to leave behind socially and economically disadvantaged young men, as defined by education and residence, as the “losers in societal competition” (Hudson & Den Boer 2002). Among unmarried rural men, for instance, 97 percent did not have a high school diploma and 40 percent are illiterate.15 Unable to afford the normal “bride prices,” some have turned to the black market to get an abducted wife (Wiseman 2002).
It is clear then that China’s incredible rate of growth over the past 3 decades has benefited the wealthy far more than it has the poor. This trend is reflected in the gini-coefficient which far from decreasing, has increased to the unstable level of 0.48. Examining the consumption density function curve, it is clear that the majority of expenditure growth is coming from the high end of the population while those living on less than $2 a day have seen very little change. Further to this, China’s prosperity has been far more beneficial to those in urban and coastal areas compared to rural and inland areas as demonstrated by the provincial growth charts above. The lack of development regarding opportunities for females to work and add a living, coupled with the one-child policy has seen a proliferation of gender discrimination and subsequently an unbalanced society. Finally, the lack of rural development is causing a damaging brain drain as more and more people are migrating to urban areas to find work.

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