China's Evolving Caste System. What a Difference a Generation Makes.

Adios, People's Republic. Hello the Chinese Republic of Haves and Have-Nots.

For decades following its post-war creation, the People's Republic of China preached the virtues of a classless society. Of course it wasn't really true. Some fared well, most didn't. Some peoples' kids got educated, most didn't.  Yet everyone was expected to pay lip service to the egalitarian idea.

That was then. This is now. China has had nearly two decades of its "economic miracle" but, while that has benefited Chinese society it was also left it divided especially along urban-rural lines.

A while back I read a paper written by three leading Chinese economists that explored how their country would likely develop in the 21st century. It dealt with areas such as food security, population growth, the emerging entrepreneurial/consumer class. It also touched on China's growing class divide.

The paper argued that Chinese society would, of necessity, fracture. Everyone would aspire to a much higher standard of living, in some cases a Western standard of living: bigger houses, more cars, better food, luxuries of every description. It made the argument that a class of individuals were so vital to China's advancement that that they had to be treated differently, better than the masses. A metaphor was used: an island of privilege floating on a sea of relative poverty. There simply weren't nearly enough resources on the planet to float all Chinese junks. They predicted that India would face the same predicament, only worse.

Now, Foreign Policy reports that reality has set in and China's Middle Class is pulling up the ladder behind itself.


The fact that China’s urban middle classes are doing pretty well says little about whether China has anything like a true middle-class society. Income inequality is a problem throughout the world, but in China, inequalities run much deeper than in the West. Hundreds of millions of ordinary Chinese are still excluded from full participation in the country’s rapidly developing urban economy. And that exclusion is in danger of ossifying into something resembling a permanent caste system.

 China’s economic growth is legendary, and China really has come a long way since Deng Xiaoping declared China open for business 40 years ago. The three big urban agglomerations of eastern China — the areas centered on Beijing, Shanghai, and Hong Kong — have already converged in GDP per capita with developed Asian countries like Taiwan and South Korea, at least in purchasing power parity terms. And even poor, inland cities like Chengdu are doing well compared to secondary cities in other middle-income countries.

But rural China still lags far behind. That’s not surprising; rural areas all over the world tend to be poorer than cities

Even in the United States, rural households are on average 4 percent poorer than urban households.

But in China, the rural income deficit averages 63 percent nationwide, and that’s in a country with a lot of very poor urban areas that outsiders rarely hear about.

...

Today, China has started to declare its rich eastern cities to be “full.” The Chinese government intends to cap Beijing’s population at 23 million, just 1 million above its current level. Shanghai’s population is to be capped at 25 million by 2040, a goal that may prove difficult considering that its population already exceeds 24 million. While these limits are certain to be breached, China’s repressive party-state does have the capacity to coerce would-be city-dwellers to move elsewhere.

It’s not just glamorous megacities like Beijing and Shanghai that are closing their doors. Even second-tier cities and provincial capitals like Chengdu are increasingly pushing out the poor. Forcible slum clearance in China often involves the destruction of so-called urban villages: densely populated but often chaotically planned former villages that have been swallowed up by the growth of nearby metropolises.

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China’s President and Communist Party General Secretary Xi Jinping has staked his reputation on a promise to turn China into a moderately prosperous society by 2020. It’s not much of a gamble. China already is a “moderately” prosperous society. The real challenge is to grow China into a fully prosperous society
, and that can only be done by raising the rest of the country to something like the income levels that prevail in the eastern coastal cities — or at least those of second-tier inland cities like Chengdu.

That means expanding the middle class, not just by getting a few more people over an arbitrary income line, but by expanding economic opportunities and fighting social exclusion. Here, the politics get more difficult. In a distinctively Chinese form of discrimination, the natives of cities like Beijing and Shanghai often look down on their country cousins from places like Sichuan. China may not be a democracy, but articulate middle-class professionals do have the ability to influence policy, especially in their own cities. Increasingly, the policy they want is exclusion.