A Ferrari and a cyclist share the road in Beijing on Feb. 25, 2011, illustrating the yawning wealth gap between China's rich and poor. (Peter Parks/AFP via Getty Images)
China is running counter to the goal of “common prosperity” proposed by its communist rulers, as it becomes further polarized between rich and poor, with a rise both in the number of billionaires and in the unemployed or non-earning populations.
“Common prosperity” has been among China’s top buzzwords since 2021. The slogan was revived by Chinese Communist Party (CCP) policymakers that year and emphasized at the party’s 20th national congress in October of 2022 and its Two Sessions meeting this March.
In an interview with The Epoch Times on March 24, economist Li Songyun said that the gap between rich and poor in China has widened further, taking the country even further from “common prosperity.” The term is merely a political slogan, he said.
On March 23, the Hurun research institute released its “Hurun Global Rich List 2023.” The list showed a record drop in the number of billionaires in the past year. Still, China set the pace with 969, 40 percent higher than the second-ranked United States (691) and fivefold more than third-ranked India (187).
A visually impaired musician plays an erhu, a traditional Chinese stringed instrument, in a high-end shopping district in Beijing, on March 24, 2022. (Kevin Frayer/Getty Images)
The report finds that Beijing is still home to the world’s greatest number of billionaires.
According to “Hurun China Wealth Report 2022,” published on March 10, the number of ultra-high-net-worth (UHNW) households in China with $30 million in investable assets reached 49,000 in 2022.
Those 49,000 households account for ten-thousandths of the total households in China, based on the official claim of 1.4118 billion people in 2022, and the average household size of 2.77 people.
Describing the lives of Chinese high-net-worth-individuals (HNWI) in the Hurun Chinese Luxury Consumer Survey 2023, Rupert Hoogewerf, chairman and chief researcher of the Hurun Report, said that during the last three years of the pandemic, the habits of China’s high-end consumers have undergone significant changes, such as an increase in the number of vacations and a marked increase in their passion for travel.
Hurun’s report also said that high-end spending by HNWI is a significant contributor to China’s economy. The country’s high-end consumption market size in 2022, although down 5 percent from 2021, still reached 1.65 trillion yuan (about $240 billion). The report said the main reason for this decline is the nearly 20 percent shrinkage in the size of the luxury car market.
However, in general, overall consumption in China remains weak.
High Unemployment and Low Income
A job fair in Beijing on Aug. 26, 2022. China's slowing economy has left millions of young people fiercely competing for an ever-slimming raft of jobs and facing an increasingly uncertain future. (Jade Gao/AFP via Getty Images)
At the end of 2022, the CCP lifted its harsh “zero-COVID” policies as part of an effort to boost consumption and the economy. However, in the first months of 2023, the economy did not show signs of recovery as hoped.
The January-February 2023 Fiscal Revenue Situation, released by China’s Ministry of Finance on March 17, indicated that in the first months of 2023, Chinese consumption continued to fall, unemployment increased, and state debt swelled.
“The unemployment rate has risen in the years of the epidemic,” said Li, citing zero-COVID policies that led to the closure of many small and medium-sized businesses. In addition, harsh regulations such as those placed on after-school training centers, real estate, and the internet technology sector have frustrated private entrepreneurs and forced them to leave China.
“The private economy is the backbone of China’s economy, and if it fails, the future of China’s economy is likely to be ‘common poverty,’” Li said.
Growing unemployment in China is also reflected in a diminution in personal income tax revenue. Official data showed that China’s individual income tax growth rate dropped to 6.6 percent year-over-year in 2022 and fell by four percentage points in February 2023, from a month prior.
In addition, the deteriorating low-income situation dragged down the overall consumption level of the country, Li said.
According to official fiscal balance reports for 2021 and 2022, social security and employment expenditures increased by 3.4 percent in 2021 and 8.1 percent in 2022. The expenditure growth expanded to 9.8 percent in January-February of 2023, reaching an amount of 780.5 billion yuan, or about $117 billion.
Compared to the 612 billion yuan (about $92 billion) spent in January-February of 2020, when the COVID-19 pandemic broke out in China, social security and employment expenditures grew by about 28 percent over the three years of the epidemic, indicating that more people are reliant on social welfare for basic living in 2023.
Negligible Aid for Poor Chinese
In China, welfare support for the poor is minimal.
For example, the subsistence allowance averages merely 717 yuan ($108) per month in urban areas, and 581 yuan ($87) per person per month in rural areas.
Out of the 238 million who have unemployment insurance, 2.97 million people received unemployment insurance benefits in 2022, 380,000 people more than in 2021, according to Feb. 28 data by the Bureau of Statistics.
Further, large numbers of Chinese would not receive unemployment insurance benefits even if they were unemployed, according to a 2020 report by the Peterson Institute for International Economics, which reported that less than half of China’s urban labor force and less than one-fifth of the country’s huge migrant worker population participate in the unemployment insurance system.
A Surge in the Assets of Chinese Billionaires and Millionaires
A man walks past portraits of (L to R) late CCP chairman Mao Zedong, former Chinese leaders Deng Xiaoping, Jiang Zemin, and Hu Jintao, and current president Xi Jinpingin in Yan'an, in China's northwest Shaanxi province, on Oct. 15, 2022, one day ahead of the 20th Communist Party Congress. (Jade Gao/AFP via Getty Images)
As more people join the flood of unemployed, the assets of wealthy people are proliferating. As evidenced by the Hurun China Wealth Report 2022, the number of ultra-high-net-worth families is growing more than the number of high-net-worth families, and the number of high-net-worth families is growing more than that of affluent families.
The report detailed that affluent families with $6 million in assets increased by 2.1 percent, high-net-worth families with $10 million in assets increased by 2.5 percent, and ultra-high-net-worth families with $100 million in assets increased by 3.5 percent year-on-year.
The idea of “common prosperity” may seem to have evolved since it was introduced. However, Li points out that there is no essential difference between Xi Jinping’s “common prosperity” and former leader Deng Xiaoping’s “let some people get rich first.”
In reality, “the CCP has the final say on who can get rich and who can’t in China,” Li said.
Kathleen Li has contributed to The Epoch Times since 2009 and focuses on China-related topics. She is an engineer, chartered in civil and structural engineering in Australia.
