If mainland China’s 400 billionaires formed one country, it would be the 8th largest economy in the world. Its GDP would be higher than that of Brazil. Yes, there are 400 people with more than 210 million Brazilians wealth.
In 2020, these billionaires saw their fortunes increase by $ 750 billion (4 trillion reais), an astonishing 60% increase from 2019, according to Forbes. By far, China was the country where the rich got richer.
Today, on the eve of the Chinese New Year holiday, the queues in front of luxury stores in Beijing are just the most visible sign of this phenomenon.
The contrast is also surprising. With a population of 1.4 billion, China has 600 million people living on up to $ 150 per month, as Premier Li Keqian recalled last year.
In fact, while growth in China has accelerated, so too has the increase in the distance from the base to the top of the pyramid.
In 2017, French economist Thomas Piketty noted that, in the past, the level of inequality in China was close to that of the Nordic countries. Of course, the Chinese were, shall we say, also poor.
The point is that over time the inequalities have moved closer to the American level. According to Piketty, the top 10% of the pyramid held 41% of national wealth in 2015, but only held 27% in 1978 (in Brazil, the 10% held held 42.5% in 2018, according to the Bank world).
According to Beijing’s accounts, poverty has not exactly been a problem in China since the end of 2020. As a result, tackling inequality and expanding the middle class will gain prominence among national priorities.
Last year, Xi Jinping made clear the need to distribute the fruits of growth more equitably. Last week he spoke again about the income gap and the difference between the countryside and the city, possibly the biggest challenge in the distribution of wealth in the country.
Inequality is not new, but it has become urgent for China to tackle it as closing the wealth gap has become an economic imperative. Under the new five-year plan, the government intends to stimulate economic growth through domestic consumption. However, the excessive concentration of income limits the expansion of the consumer market.
As elsewhere, the pandemic has exacerbated inequalities. Migrant workers have been particularly affected. The economic recovery has been rapid – but unbalanced. Billionaires, as Forbes points out, have come a long way.
“We have to let some get rich first,” is an oft-quoted phrase from Deng Xiaoping. Deng added, “so that everyone can prosper later” – but this part is not always remembered.
In fact, China would not have gotten to where it was if it had wanted to raise all ships the same way at the same time. However, as Deng recalled, the rich and the super-rich should take advantage of the income of others.
It is not good for a country that claims to be a socialist, ruled by a communist party, to hold the title of one of the most unequal societies in the world. In addition to being an ethical imperative and an economic necessity, the fight against inequalities is a question of legitimacy for the Chinese political model.
We are a family business.
Inequalities will receive more attention now that the poor are former poor. And billionaires, more billionaires than ever.
LINK PRESENT: Did you like this column? The subscriber can release five free accesses from any link per day. Just click on the blue F below.