March 10, 2011 / 11:56 AM / in 7 years

Rise in billionaires tests China's rich-poor divide

BEIJING (Reuters) - Getting rich remains glorious for many Chinese, but such aspirations pose a challenge to the government’s attempt to bridge a potentially divisive rich-poor divide.

China’s transformation from an impoverished backwater to the world’s second-largest economy has created a growing army of super wealthy, with the number of billionaires nearly doubling to 115, according to the Forbes annual list of the world’s richest people.

Some have gained more than others. A maxim widely attributed to former Chinese leader Deng Xiaoping said that “to get rich is glorious,” but that wealth has gone to a narrow segment of the populace.

Rural incomes have been rising more slowly than urban incomes for two decades -- a factor that could threaten social stability in a country where 150 million people still live on just $0.50 a day.

The issue is especially thorny for Chinese President Hu Jintao and Premier Wen Jiabao, who have largely staked their public legitimacy on addressing the widening wealth gap.

Rife corruption and collusion between government officials and businessmen have also fueled popular discontent that could bring down China’s Communist Party, its leaders have warned.

“If someone’s a billionaire, that’s a good thing,” said Mao Yushi, an 82-year-old economist and a critic of China’s one-party rule. “But one needs to look closely at how that person got the wealth. Did he depend on the market or did he depend on special privileges?”

“The opportunities here are not equal. China is a society that has special privileges. Not everyone has it, only a small number do.”

China has a complex relationship with its new magnates.

Once vilified as evil capitalist exploiters, the ruling Communist Party now goes out of its way to lavish attention on them and bring them in to the political system.

At the same time, high-profile cases in recent years of the very rich being jailed for corruption or other offences have dragged many names and reputations into the mud.

Widely publicized cases of rich Chinese treating their poorer countryfolk with disdain has also generated heated debate.

But what is generally not talked about in Communist Party-ruled China is the wealth of those connected with the senior leadership, a taboo subject.

“What about the wealth of the Standing Committee?” wrote one user on the online bulletin board of Beijing’s elite Tsinghua University, referring to China’s ruling inner circle. “Are their relatives being rated too?”

The real number of billionaires could be a lot higher due to the reticence of some Chinese to reveal the extent of their wealth, fearful of attracting unwanted government attention, or wanting to hide their links with government.

“This has ignored the full strength of China,” wrote a Weibo user called Lixin629 of the Forbes report.

“China has many more rich people who have not announced their assets. If the ‘two sessions’ (parliament) allow government officials and state-owned enterprises to announce their total assets, the results will be different.”

The Forbes list quickly became one of the most talked-about subjects Thursday on Sina’s Weibo, China’s Twitter-like micro-blogging service. Many praised the rise of the new wealthy.

“More power to the Chinese for their rapid climb up the ranks of the rich list,” wrote Hebei Jade Dragon.

“I think it’s a good thing. It shows that China is getting richer and there will be fewer poor people,” said Wang Fu, 23, a delivery boy working in China’s commercial capital Shanghai.

In Taiwan, which China has long claimed as a renegade province, the Forbes list showed an increase in the number of billionaires to 25 from 18, largely thanks to political rapprochement with Beijing in recent years.

INDIA‘S RICH-POOR CHASM

Fifty-five Indians are on the Forbes list, and with the top seven representatives boasting a combined net worth of $123 billion, equivalent to a tenth of the GDP in a country where nearly half a billion people live on under $1.25 a day.

Few spectacles typify the stark differences between the two Indias as Mukesh Ambani’s $2 billion, 27-storey mansion in Mumbai, whose terrace gardens offer a view of some of the country’s largest slums where residents lack safe drinking water or toilets.

Ambani, worth $27 billion and No. 9 on the Forbes list, himself has warned that rising inequality in India was unsustainable.

Commentators say the divide will continue to widen but India’s democratic systems will prevent any mass uprising against perceived unfairness.

“In the name of allowing markets to function, the state has shifted allegiance to those who are already well endowed. This trend can only continue,” said C.P. Chandrasekhar, a professor of economics at New Delhi’s Jawaharlal Nehru University.

“That also means there will be instability of a different kind. After some point, people will vote out those in power.”

Additional reporting by Huang Yan in Beijing, Soo Ai Peng in Shanghai, C.J. Kuncheria in New Delhi and Jonathan Standing in Taipei; Editing by Don Durfee and Miral Fahmy

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