China: disparity between rich and poor preparing renewed class struggle

The introduction of the “market economy”, i.e. capitalism, in China is provoking massive social contradictions: extreme poverty at one end, extreme wealth at the other. But a gigantic proletariat is also being created, the “gravediggers” of capitalism, as Marx used to say.

Chinese state media has recently highlighted the growing disparity between low and high-income levels. The top 20% of the population consumes 50% of overall national income, while the bottom 20% have to make do with a mere 4.7%. These figures were published in the Xinhua News Agency and were taken from a UN report on China. (

The same article goes on to say that, “a report by the Institute of Labour and Wage Studies of the Ministry of Labour and Social Security points out that since 2003, China's income inequality has worsened rapidly and has now reached the ‘orange’ level, the second most serious by the institute's standards. If no effective measures are taken, it could worsen to reach the most serious ‘red’ level.”

The report of the UN was based on the Gini coefficient. This is a statistical measure of inequality in any country. Zero expresses “complete equality” and one represents “complete inequality”. In China this coefficient has reached 0.45. According to internationally accepted standards when the Gini coefficient for any country goes beyond 0.40 the situation could become unstable. But in China not only has the 0.40 coefficient been surpassed, it is continuing to grow.

As the Xinhua agency says, “If the trend goes unchecked, the country's goal of common prosperity for all of its people will not be achieved and the widening gap may trigger social unrest.”

This report highlights the concern among some layers within the regime that if these trends continue there could be serious social unrest. Already there have been some bitter strikes and violent protests. The government has come up with no real solutions, apart from lowering taxation for some income brackets.

The article goes on to say, “…in practice, some people have accumulated a mountain of wealth under the auspices of promoting efficiency. While they get rich, the taxation and social security system, or the re-distribution arrangement, have failed to adequately promote social fairness.

“The core of China's social inequality is, in the words of Wu Jinglian, an influential economist, inequality of opportunities. Although entrepreneurship and diligence account for the success of some rich people, many of the start-ups have grabbed wealth through colluding with government officials to engage in power-for-money deals.”

In early 2000 the Chinese government had already expressed concern at growing poverty levels and decided to increase its spending on poverty relief by one billion yuan, bringing overall poverty relief spending to around 26 billion yuan (about US$3.2 billion). The money was supposed to tackle poverty in rural and remote areas. Since then poverty levels have increased and so has social polarisation.

This also reminds us of the capitalist west. There is a lot of talk about “poverty alleviation” and some money does get spent. But it cannot tackle the fundamental problems. Increased poverty levels and a growing social divide between rich and poor are integral to capitalism. They go together. You cannot have capitalism without poverty.

In fact the Xinhua article quoted above explains that social differentiation is a logical consequence of the introduction of market reforms, i.e. capitalism. It does not question the road to capitalism; it just stresses the need to introduce some kind of social buffer, some mechanism, which would avoid the lower layers falling into abject poverty, their main concern being the political implications.

There is a growing polarisation within the cities, between the very low paid and the high paid, but also between town and country. The conditions of the migrant workers (there are reported to be 38 million construction workers in the cities, most of them migrants) are atrocious. They are worked into the ground and earn very little. Many of the 6,000 workers who died in mining accidents last year were migrants from the rural areas.

But at least in the cities average incomes have reached around $1,000 a year. In the rural areas average wages are still around $300 per year. The Xinhua report stresses that other developing countries with these kinds of wage levels have tended to see "social contradictions" over time!

What they mean is that the class struggle is on the agenda! It reminds one of the old joke from the 1960s about Brezhnev. Brezhnev was showing off all his wealth to his old mother – his dacha, his car, his luxury goods, etc – in an attempt to impress her. But she looks worried. Brezhnev asks her what is worrying her. And she replies, “this is all very good my son, but what if the reds return?”

These bureaucrats, who have enriched themselves at the expense of the Chinese workers and peasants, may remember something about the 1926 and 1949 Chinese revolutions. The masses rose up and finally destroyed capitalism in China. For the last twenty years or so, these bureaucrats have been guiding China steadily towards capitalism, and some of them have done rather well. But now the spectre of the class struggle is coming back to haunt them

In the cities huge social contradictions are piling up. You can see old people digging through rubbish looking for something to sell. This was unknown in the past in China. Of course it wasn’t unknown in the capitalist west. So China isn’t just importing oil or coal, it is also importing all that is worst in capitalist society. Close to 100 million Chinese are living on less than $100 per year. The World Bank calculates the poverty line as being those who live on less than $1 a day. Therefore the number of poor is actually much bigger.

Workers are forced to live in shacks, basically shantytowns that are spreading across China, while at the same time we see the building of luxury apartment blocks. The contradictions could not be more glaring.

China is indeed experiencing a massive economic boom. It is becoming a major power on the world scene. But with this development come all the contradictions of capitalism. The one positive thing about all this is that a massive proletariat is being created in China, a proletariat of hundreds of millions. These have already started to stir.

Once this proletariat rises to its feet, gets organised and takes on the new Chinese bourgeois, the world will tremble like it has never trembled before!