Blog Asia Pacífico por Carlos Aquino

Un articulo mio en China Daily
http://www.chinadaily.com.cn/cndy/2010-06/01/content_9914339.htm

Five steps to a better society
By Carlos Aquino (China Daily)
Updated: 2010-06-01 07:48 Comments(0) PrintMail Large Medium Small





China's economy is growing, but so is its income divide. The Gini coefficient has increased alarmingly. The coefficient measures income inequality in a society, with 0 signifying perfectly equal distribution of wealth among households and 1 denoting that a single household controls all the wealth.

When China's reform and opening up began in 1979, its Gini coefficient was less than 0.35. Today, it is 0.47. If this trend continues, grievances against the system will grow and could threaten the country's stability, as well as economic development.

In a way, the widening income gap in China is the unwanted result of some of its development policies such as opening up the coastal areas first and leaving inland areas behind. This triggered a mass migration from rural to urban areas.

Migrant workers, who migrate to cities in search of better opportunities, are among the poorest people in the country. They cannot fully enjoy the benefits of living in cities, because most of them are not recognized as residents of the cities they work in. According to their hukou (household registration), they are considered rural residents (and cannot become urban dwellers), and thus have no access to housing and healthcare and cannot send their children to school in cities.

The Chinese government has been trying to modify the hukou system, but the process needs to be expedited because millions of more people will move from rural to urban areas.

China must do something to avoid the trap that Latin American countries fell into. The Gini coefficient in Latin American countries is around or even more than 0.50. So, what can China do to ensure that more people share the fruits of its economic growth?

First, the Chinese government should improve the living standards of rural residents, who comprise the largest number of poor in the country, and take steps to raise their income level, which is one-third or even lower than that in urban areas.

The government has to help farmers increase their production by introducing machinery and fertilizers, and shifting their production from low-value to high-value products (from basic grains like rice and wheat to vegetables and fruits, for instance). It has to improve the irrigation system and roads, too, so that farmers can carry their products easily and at lower costs to markets. Once, the income levels of rural residents increase, fewer people would move from villages to cities for jobs.

Second, improvement of the education system and making it accessible to all should not be confined to paper; it should be real. Poor farmers find it very difficult to send their children to school to even finish their basic education. As a result, the cycle of poverty, lack of proper education and low-paying jobs continues.

Third, the government has to increase its spending on social infrastructure, such as hospitals, schools and housing, especially in the urban areas. Housing prices have risen so drastically that it has become almost impossible for low-income earners to buy a house even in rural areas. The government should devise a scheme to build subsidized houses for the low-income and poor households. That leads to another government task: creating a social safety net for disadvantaged people and even granting direct subsidies to some of them.

An interesting example of this can be found in Brazil, a country known for its high income-disparity level (Gini coefficient 0.57) but which has taken great strides in the past decade toward narrowing the income gap. Success has come through a government scheme under which a certain amount of money is handed directly to the poorest people every month. But this money comes attached with certain conditions like parents have to ensure that their children complete their basic school years and undergo regular medical check-ups.

Fourth, the fight against corruption should be intensified. When people who have not benefited from the country's economic development see that corrupt officials escape without punishment, their frustration grows and pushes them toward violence. As people get disenchanted with the economic and social system, their resentment grows further. Hence, it is necessary to establish a system that will ensure that the guilty, regardless of their position, are punished.

And fifth, people must be allowed to express their disagreements with the economic and social situations. A system in which people can voice their feelings and vent their frustration should be built to prevent people from resorting to violence to let off steam. This can happen only when people's representatives are made more accountable to those who elect them. Exercising some supervisory power over their elected representatives will make people feel they have a direct stake in the system and know that they can hold the authorities accountable if they do not respond to their demands.

The author is professor of international economies at San Marcos National University in Lima, Peru.


(China Daily 06/01/2010 page9)