Xi Jinping, the reigning Chinese president, realizes that China is no longer the same country it was prior to globalization. The country’s rise from third world status, to second largest economy, was well managed by the Chinese Communist Party. Unfortunately for Communism, with new wealth, the Chinese people now demand more from their government. With wealth comes the desire for civic engagement, and that clearly worries Xi, as evidence by bullet point 3 in Document No. 9:
Promoting civil society in an attempt to dismantle the ruling party’s social foundation.
The document listed out “seven subversive currents coursing through Chinese society”. Civil society is one of them. Xi’s challenges are now similar to Mao’s challenges prior to the Cultural Revolution: how to deal with a growing, educated, and outspoken Chinese population, while still exerting Party control. Xi Jinping is conflicted, and because he is conflicted, he has used tactics that span the spectrum, from appeasement, to outright brutality. As the Council of Foreign Relations piece states,
“Some experts split the CCP’s power structure into two distinct camps: the “princelings,” the children of high-level leaders, and the “tuanpai,” those who, such as Hu Jintao, come from humbler backgrounds and rose to power through the Communist Youth League. Others, such as Minxin Pei, a China expert at Claremont McKenna College, see a more complex power dynamic built from personal alliances and factional loyalties juggled among three groups: retired leaders, incumbents, and the incoming elite class.”
We can think of these “princelings” and their families as the “1%” of China. We will talk more about the princelings in another piece, but Xi is one of them. They control much of the wealth in China, and are responsible for the wealth disparity that is pointed out by Peking University in a 2016 Study. It found that,
“…the poorest 25 percent of mainland households owned just 1 per cent of the country’s aggregate wealth, while the richest 1 percent owned a third of the wealth.”
The wealth disparity issue is a real one for Xi. So far his populist agenda has not done much to bridge the wealth gap. China’s Gini Coefficient indicates further evidence of the gap between the rich and the poor. The United Nations considers a Gini Coefficient above 0.4 as a sign of severe income inequality. According to the South China Morning Post,
“China’s National Bureau of Statistics published the mainland Gini Index in early July of 2017, and it…increased slightly to 0.465 last year, from 0.462 in 2015.”
“The most recent figure for the US was 0.479.”
“The top 1 percent of earners in America now take home about 20 percent of the country’s pretax national income, compared with less than 12 percent in 1978. Over the same time in China, the top 1 percent doubled their share of income, rising from about 6 percent to 12 percent.”
By UN standards, both China and the US have significant income inequality issues, but it is evidently worse in the US, not because of the concentration of wealth at the 1%, but because of complete lack of growth in wealth at the bottom 50%, between 1978 and 2015. Vox points out the same statistics in reporting of their own.
In China, the gap is completely different.
“The earners at the bottom actually collectively make more than the top earners. The bottom 50 percent make 15 percent of the total income and the top make around 13 percent.”
The striking things here is that, relative to the top 1% of each country, the bottom 50% of the population in the US is poorer than the bottom 50% in China. The point is hammered home in the following excerpt from Vox:
“Another key difference between income inequality in China and the US has to do with growth in income for both groups since 1978. In China, all groups experienced huge increases in their incomes as a result of China’s economic reforms in the 1980s. But in the US, the bottom 50 percent saw absolutely no growth over the same time period.”
That statistic is so stunning that it’s worth repeating. The bottom 50% in the US saw no growth in wealth between 1978 and 2015. Xi Jinping may very well have been taking an opportunity to jab at US democracy and capitalism when he made the following comment as part of his speech at the World Economic Forum in Davos, Switzerland:
“At present, the most pressing task before us is to steer the global economy out of difficulty. The global economy has remained sluggish for quite some time. The gap between the poor and the rich and between the South and the North is widening.”
Although the income/wealth disparity discussion is a bit of a digression, it is an important one in the context of Chinese politics. The entirety of China’s population reaped benefits from the industrialization and the economic reformation of the 80’s, 90’s, and 2000’s. This broad-based increase of wealth presents a problem for the Communist party. With new wealth, people demand new and better representation from their government. Wealth demands freedom; theoretically, only capitalism and democracy can provide that governance. This is quite the dilemma for the CCP and Xi. Document No. 9 shows that the CCP sees this dilemma as a threat that needs to be squashed.