Behind Chinese President Xi’s populism, rising social inequalities

During this year, the Chinese leadership of President Xi Jinping took on a distinctly populist tinge – notably by emphasizing “common prosperity” – that is, prosperity for all; the announcement of the abolition of absolute poverty in China; and is moving, limited in nature, to curb billionaire tycoons like Jack Ma from Alibaba and Pony Ma from Tencent, as well as highly profitable private companies that dominate the online education industry.

The Chinese Communist Party (CCP) is not about to seriously hamper the functioning of the market and private enterprises in China which have flourished in the past four decades since Deng Xiaoping initiated the processes of capitalist restoration. The CCP bureaucracy and wealthy private entrepreneurs are closely linked – some of these successful capitalists are party members or serve on various government advisory bodies.

President Xi expressed the regime’s main fear in comments to provincial officials at the ministerial level earlier this year. “Achieving common prosperity,” he warned, “is not just an economic issue, but an important political issue that matters to the party base to govern… We absolutely cannot allow [the] the rich-poor gap is widening more and more, [resulting in] the poor poorer and the rich richer.

In August, Xi told the Central Committee for Financial and Economic Affairs that more emphasis should be placed on “common prosperity” and expressed the need to “regulate excessively high incomes” and “encourage people and high-income businesses to reenter society. . “However, corporate philanthropy and token government measures to help the poor will not reverse the growing divide between rich and poor in China or elsewhere for that matter, which is rooted in the profit system.

Capitalist restoration processes, fueled by a huge influx of foreign investment and technology to take advantage of China’s large pools of cheap labor, have certainly led to huge economic expansion and increased GDP per capita. However, as in other capitalist economies, social inequalities have widened considerably and intensified social tensions. While absolute poverty in the strict sense may have been abolished, some 600 million Chinese struggle daily to live on a monthly income of less than Rmb 1,000 or around US $ 155, as the country now has more than billionaires. in dollars. than the United States.

Many indices point to an increase in social inequalities.

* The Gini coefficient is a standard measure of social inequality that ranges from 0, which represents absolute equality or all people earning exactly the same income, to 1, which represents absolute inequality or a person with all income and all others having none.

China’s official Gini coefficient has risen sharply since Deng’s “opening” in 1978, going from around 0.31 to 0.4 in 1997 and peaking at 0.49 in 2008 before dropping slightly to 0 , 47 in 2020. Any figure above 0.4 is considered by the United Nations to indicate strong inequalities, while the Chinese leaders themselves have declared that this level is potentially destabilizing.

* According to the World Bank, in 1978 the richest 10 percent of wage earners in China and the poorest 50 percent each accounted for about a quarter of the country’s total income. In 2018, the richest 10 percent took more than 40 percent of total income, while the bottom half of wage earners received less than 15 percent.

In terms of wealth rather than income, the richest 1% of individuals owned nearly 31% of China’s wealth in 2020, up from around 21% in 2000. In the United States, for example, the share of wealth of the richest 1% reached 35%. in 2020. According to the Hurun Global Rich List, the number of dollar billionaires in China reached 1,058 last year, compared to 696 in the United States.

China has set the absolute poverty line at $ 2.30 a day corrected for inflation and claims to have raised the incomes of 100 million rural residents above that level since Xi took office in 2012. The World Bank, however, sets a higher poverty line of $ 5.50 per day for upper-middle-income countries like China. On this basis, a quarter of the Chinese population lives in poverty.

* The focus on rural poverty highlights the divide between urban and rural areas where about 40 percent of China’s population reside. The figures published in the Australian Financial Review in September, 1997, urban household incomes were on average 83 percent higher than those of rural households. This figure rose to 167% in 2009, then to 132% in 2019, more than double the rural average.

An article in an American magazine Foreign Affairs earlier this year, he explained that a person with the median urban income in China is in the world’s 70th percentile, that is, richer than 70% of the world’s population, while a person with the median rural income is in the 52nd percentile of the world. “In other words, the average urban person in China is as rich as the average person in Hungary, while the average rural person in China is as poor as the average person in Vietnam,” he said.

* The rural-urban divide is also evident in cities and major manufacturing centers where nearly 300 million internal migrant workers from rural China constitute a large part of the working class. Not only do they generally have lower wages and conditions and suffer from discrimination, but the overwhelming majority have no hukou, an official residency document that provides full access to local public services such as schools and hospitals. It is a system designed to provide cheap and easily exploitable labor to industry and services in the huge manufacturing centers of the eastern coastal areas of China.

* Social inequality is also perpetuated in education where entry into China’s elite universities and therefore well-paying jobs in government apparatus or private enterprise are determined by entry-to-school results. university. According to Foreign Affairs article, “Average families in some prominent cities spent a quarter of their take-home pay on private tuition … About 22% of students enrolled at China’s prestigious Tsinghua University in 1990 were from rural China, but in 2016 that percentage was 10.2 percent. Urbanization may explain some, but certainly not all, of this huge change.

* The author of Foreign Affairs article, Branko Milanovic, professor at the London School of Economic, conducted a study on the evolution of the social composition of what he called “the elite” of China, the richest 5% of the population over the period 1988 to 2013. While in 1988, three quarters of the elite population was employed by the government, 25 years later, half were either capitalists or professionals. In addition, this social divide has been perpetuated within the CCP. When the study looked at “wealthy members” of the CCP, “about half were from the private sector oriented classes.”

The latter statistic is a significant indicator of the class character of the CCP. Far from being a political vehicle for reducing social inequalities, it is a spokesperson for the bourgeoisie resulting from the processes of capitalist restoration and looting of the public sector. Private entrepreneurs have relied on relationships with the CCP hierarchy to advance their business interests fueling corruption, which is endemic at all levels of government in China,

While Xi launched a campaign against corruption as soon as he came to power, he has no intention of carrying it through as it would destabilize the entire rotten bureaucratic apparatus that he and the CCP rely on for. govern. Likewise, his calls for “common prosperity”, the philanthropy of the super-rich and the need to reduce social inequalities aim to deflect the growing discontent and opposition of workers and young people who have the potential to erupt. in generalized social unrest.

A commentary by Chinese academic and venture capitalist Eric Li in the United States Foreign police underlines fears in Chinese ruling circles of political radicalization taking place among layers of young people concerned about the glaring social inequalities in China.

Li, a staunch supporter of the CCP, said, “While my generation was primarily concerned with China’s poverty and, therefore, focused on the market economy, jiulinghou and linglinghouse [those born after 1990 and 2000 respectively] see the main challenges for them and for Chinese society as being rooted in inequalities.

“Even in the extraordinarily entrepreneurial tech sector, calls from young people to end excessive exploitation, both of low-paid delivery men and of better-paid but overworked technical and professional labor force, are increasingly being made. stronger.”

Li also noted growing hostility to the market and capitalism, and growing support for socialism and communism.

President Xi is undoubtedly hoping that his populism will fool the people. However, when the rhetoric does not match reality, as it inevitably will, layers of young people and workers will seek a genuine socialist alternative to the corrupt CCP apparatus, which they will find in history and principles. of the International Committee of the Fourth International – the world Trotskyist movement – uncompromising opponents of Stalinism and Maoism.