Good news from China

November 29, 2017

The Financial Times has several interesting pieces on recent trends in China:

Chetan Ahya, an economist at Morgan Stanley, said that alongside the decline in the Gini coefficient, China has also improved another measure of inequality, the rural to urban income ratio, from a low of 29.4 per cent in 2004 to 37 per cent by 2016.

The rapid rise in rural incomes means Morgan Stanley now predicts that China will reach the World Bank’s high-income threshold of $13,700 a head by 2025, two years earlier than its previous forecast.

Alongside rising wages, Mr Ahya said equality was also being aided by gradual, if slow, reform of China’s hukou system, which has restricted access to public healthcare, education and housing for the many millions of migrant workers who have flocked to China’s major cities.

The existence of this system meant that, “on an underlying basis, income inequality was actually higher” than the Gini measure suggested, Mr Ahya argued. However, with cities with populations below 500,000 now fully open to migrants, those with populations up to 5m having to accept urban residency applications after five years of social security payments, and Beijing having set a target of giving urban residency status to 100m migrants by 2020, this impediment is starting to be removed.

There is also progress on the environment, something I noticed the last time I went to Beijing:

A lower Gini coefficient also helps de-risk investment in China, Mr Bakkum argued. “The current leadership understand that social inequality and environmental problems can lead to social unrest.”

As an example, he cites the notoriously bad air pollution problems in Beijing, which now finally seem to be being addressed. “They have focused a lot on the environment in Beijing in particular and you can see the difference. The risk of big social unrest because of the environment has come down.”

Another FT article suggests that the Chinese are beginning to heed my “more money, less credit” suggestion:

China’s central bank injected $47bn into its financial system, its largest intervention in nearly a year, in an effort to calm investor fears that Beijing’s crackdown on debt-fuelled growth would put a brake on the country’s rapid expansion.

Please don’t take any of this as an endorsement of the recent political trends in China, which has followed the sort of anti-intellectual nationalism that we see in Russia, Turkey, Poland, Hungary, Philippines, India, and yes, another former leader of the “free world”.

Speaking of China, this is a smart move by the GOP–at least in political terms:

The U.S. Justice Department has threatened to sue Harvard University to force it to turn over documents as it investigates whether the Ivy League school’s admission policies violate civil rights laws.

Citing a 2015 lawsuit that charges the school’s affirmative action policies discriminate against Asian-American applicants, the federal government in a letter set a Dec. 1 deadline for Harvard to hand over documents on its admission policies.

I don’t have an opinion either way on whether this is good public policy, but the Dems are foolishly throwing away votes in the Chinese community by ignoring this issue.  It may not have shown up in the polling yet, but there is a strong move toward the GOP among educated Chinese-Americans, and it’s driven almost exclusively by perceived anti-Asian racism at elite universities.  This should be a strong Democratic issue, as the GOP generally doesn’t believe in these sorts of anti-discrimination lawsuits.  The fact that it’s the GOP doing this and not the Dems is  .  .  .


PS.  The article points out that Brazil has made more progress against “inequality” than China, as seen by the more rapid decline in its Gini coefficient.  So in which country are the poor doing better?  (Hint, compare recent GDP growth rates.)



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