Major Changes in China Will Impact Hong Kong and Japan

Epoch Times Hong Kong branch president's speech Part 5
May 6, 2015 Updated: May 6, 2015

On Feb. 18, 2015, Epoch Times Hong Kong branch president Ms. Guo Jun gave a speech in Tokyo’s Shinjuku Keio Plaza hotel on the current affairs of China. She provided a detailed analysis of some key issues surrounding the great changes China is currently going through and their implications for Japanese and Hong Kong society.

[last week Part 4]

Now we will talk about the characteristics of China’s current social situation.

1. Huge Wealth Gap

According to a report published in mainland China’s The Time Weekly of the richest 3,220 people in China 2,932 were princelings or “red nobility.”

An investigation into the source of wealth for the super-rich “red nobility” reveals a web of vast and tangled dealings revolving around their families’ power capital. By getting involved in the resource industries, monopoly industries, and capital market operations and integration, they rapidly accumulated a staggering amount of wealth.

A study by Peking University found that China’s Gini coefficient had reached 0.6, far exceeding the level of 0.4 beyond which there is a risk of social unrest.

The report stated that income inequality had risen rapidly during that period, as the richest one percent of Chinese households held more than one third of the nation’s wealth, while the 25 percent of households at the bottom owned only one percent of the country’s property value.

There are even more alarming data. An earlier report from the People’s Bank of China indicated that 0.4 percent of China’s population controlled 70 percent of national wealth, making it the most wealth-concentrated country in the world.

According to a new study from the University of Michigan, published in the Proceedings of the National Academy of Sciences of the United States (NAS), China’s Gini coefficient is about 0.55. China ranks as the country with the worst income inequality in the world.

According to a series of reports from Bloomberg News last year, after the death of Mao Zedong, China was ruled by eight Chinese Communist Party (CCP) veterans known as the “eight families”: Deng Xiaoping, Bo Yibo, Chen Yun, Song Renqiong, Peng Zhen, Wang Zhen, Li Xiannian, and Yang Shangkun.

At least 18 of their descendants own or operate offshore-related entities, including on the British Virgin Islands and the Cayman Islands. At least 26 of their descendants control the vast majority of China’s leading state-owned enterprises and have amassed an astounding fortune.

Wang Zhen’s son Wang Jun, Deng Xiaoping’s son-in-law He Ping, and Chen Yun’s son Chen Yuan already had a combined assets value of more than US $1.6 trillion in 2011. This massive, astronomical amount of assets is equivalent to one fifth of China’s annual economic output and is equal to the total GDP of South Korea and Taiwan.

A study from the World Bank also shows that one percent of China’s households occupy 41.4 percent of the wealth of the country, and the trend of social polarization is becoming more and more obvious.

2. Hostility Toward Officials

Protests, riots, and other group events caused by local officials’ corruption and environmental degradation have reached more than 200,000 since 2010. Last December, several thousand teachers from Anhui Province held a strike and surrounded local county buildings to protest low wages.

The CCP’s Central Propaganda Department and the Chinese Academy of Social Sciences conducted a survey in 2010 and found that on Internet blogs, microblogs, and forums about Chinese political and policy issues, nearly 90 percent of comments were criticizing the government.

The extent of the hostility toward the rich and state officials can be seen from the expressions of ordinary Chinese Internet users. In China’s social news, if there were a civil dispute, as long as one party involved was the officials or the rich, the public opinion of Internet users would overwhelmingly support the other party, no matter what the real reasons and facts behind it might be.

In order to strengthen the communist regime, the CCP has allocated 815 billion yuan (US$131 billion) to stability maintenance fees this year, higher than the military spending of 808.2 billion yuan.

3. Communist Ideology Bankrupt

A joke has been circulating in China, which says that Chinese officials hold meetings to talk about communist theories and policies, but in fact the officials do not believe their own words and the audience does not believe them either. The officials know that the audience does not believe their teachings, and the audience also knows that the officials do not believe.

This feature may affect China’s relationship with Japan greatly. After the fallout of communist ideology, the CCP needs to use nationalist ideology to maintain its legitimacy, so the CCP often provokes nationalist sentiment.

From China’s point of view, the United States and Russia are too big and would be difficult to deal with, and Vietnam and the Philippines are too small and would not easily stir up nationalist sentiments. Japan becomes the perfect choice.

Japan invaded China during World War II, an important reason that can inflame national sentiment. At any time, if China’s internal problems are getting worse, the authorities will consciously or unconsciously use this tool.

4. Eve of CCP’s Downfall

Economic efficiency and social equity are the two poles of social development of any country. They have to be in pace with each other and achieve a certain balance in order to maintain social stability and continue to make progress.

For the past 30 years, China’s economic growth has been at the expense of social justice. In fact, Chinese history has provided the best interpretation.

Each new dynasty was built under relatively fair circumstances. After a long period of war, civilians were in a miserable situation, and the new government would distribute land to encourage farming. This led to rapid economic development.

After some time, the wealth disparity increased as the bureaucratic elite gradually controlled the social resources, but the authoritarian imperial system could not resolve this problem. Finally the wealth inequality deteriorated, which led to social turmoil, violent protests, and a large-scale war.

Then the next cycle would be entered. Most cycles lasted 200 to 300 years.

Through elections, modern democratic societies shorten the cycle to 10 to 20 years. For example, in the United States, Republicans and Democrats take turns in power, so the problem can be resolved in a short cycle.

In fact, the Chinese regime has been vigilant about the issue. After 2006, Hu Jintao and Wen Jiabao’s government implemented a social income distribution reform, hoping to increase the income of lower social groups.

However, the effect has been very limited, because China’s rich groups are the officials and their families. Having the rich design policies, implement policies, and allow others to deprive them of their own interests is probably the hardest thing in the world.

In fact, Bo Xilai’s Red Songs campaign and Striking Black campaign were measures for the current situation in China. He implemented leftist policies in Chongqing and received some support from the low socioeconomic class.

I believe that Xi Jinping will continue to implement similar policies to suppress the powerful and the rich and to increase the income of the middle and lower socioeconomic classes. However, as mentioned before, it will be difficult to achieve the designed results successfully.

If Xi Jinping cannot follow the historical trend to reform China’s political system vigorously, it will be too hard for his economic policies to succeed.

Translated by Susan Wang. Written in English by Sally Appert.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.