China’s growth masks lag
China’s rapid economic recovery from the coronavirus pandemic masks the fact that the gap between rich and poor remains wide.
While official data yesterday showed growth exceeding pre-virus levels in the fourth quarter, a deeper look at the figures show the poorest Chinese still earn only a fraction of the income of the wealthy.
The richest 20% of Chinese had an average disposable income of over 80 000 yuan (about R183 000) last year. That was more than triple the median and 10 times what the poorest 20% received, according to data released by the National Bureau of Statistics.
Millions of Chinese workers lost their jobs early in 2020 as lockdowns to contain the virus hit demand across the economy and shuttered factories, restaurants and shops. The initial lockdowns in January and February also trapped many of them in their hometowns after they travelled there for Lunar New Year celebrations and were unable to return to their workplaces in the cities.
When lockdowns were lifted later in the spring and many businesses reopened, millions of workers didn’t return.
And while the government said it created almost 12 million new urban jobs last year, the official jobless rate only tracks people who have been resident in cities for at least six months.
Even though growth in nominal income for the poorest Chinese grew at a faster pace than the wealthiest last year, the effects of lost income and jobs can be seen clearly in consumer spending.
Retail sales fell 3.9% in 2020 from the previous year, while per-capita consumption, after adjusting for inflation, dropped 4%.
The 17% drop in spending at restaurants last year hurt not only the incomes of business owners, but also the pay of their workers and delivery drivers.
In contrast, China’s industrial economy hit new records in 2020.
Crude steel output rose above 1 billion tons, and the production of rolled steel, pig iron, and aluminum also hit new highs as exports and investment in infrastructure and real-estate climbed, spurring demand for metals.