Sunday, February 08, 2009

Poor Chinese, Wealthy Chinese

Examining social phenomena with quantitative methods starts in the west, and most of the commonly used models are based on culture and study in the west. It should be noted that the cultural differences must be taken into account when applying popular models on China studies.

Sixty percent of wealth in the United States are owned by top 5% people. The corresponding figures in China, however, are 70% and 0.4%. When the world is tapping into the 'high personal saving ratio' of Chinese to drive it out of the economic downturn, what people may not have realized is that 80% of the deposits in China are made by 20% of its people. These 80% is unlikely to be spent on normal commodities, and family appliances is not likely to make a dent on it either. The rest 20% is shared by 80% of Chinese people, which equivalents to 3,385 Yuan RMB or $500 per capita. So a bunch Chinese with $500 saving in the bank are going to save the world? Not to say that these group of people will not be making extra spending to jeopardize their very survival.

Traditional values and family architecture have helped maintaining stability despite the huge gap between rich and poor, though. In 2007, professor Li Yining of Beijing University announced a new method to calculate the Gini Coefficient. Because the huge income gap between residents live in city and rural areas (72:1), two separate number will be calculated, one represents the Gini Coefficient among city dwellers, while the other represents that of farmers. Finally, a third number is calculated as the mean of the two numbers, and to be used as the official Gini Coefficient of China.

Xin Hua Blog

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