Worrying about “unequal China” is all the rage. As China’s export factories boom, bringing unprecedented prosperity to coastal cities such as Beijing, Shanghai and Guangzhou, commentators have increasingly focused on the plight of the country’s 800m rural dwellers, who either toil in pitiful conditions on primitive farms or become ill-paid labourers in coastal sweatshops and construction sites.
China’s Gini coefficient, a measure of income inequality, has been rising steadily and is now exceeded by only a few Latin American countries (and by that paragon of unfettered modern capitalism, Hong Kong). Many Chinese and foreign analysts fear that the country risks turning into the next Brazil, with a small class of permanent “haves” barricading themselves within gated communities against the masses of slum-dwelling permanent “have-nots” without. Such an outcome quickly becomes self-perpetuating: as Latin American countries have demonstrated, the main interest of an entrenched elite quickly becomes the protection of its own privileges, rather than the promotion of broad-based growth.
