Saturday, 3 May 2008


There has recently been lots of news about the financial difficulties in the west, the so-called ‘credit crunch’ and the mortgages fiasco in North America have created a whirlpool of despair, doom and gloom.
Houses aren’t doubling in value every month, you actually need a job to get a mortgage, and most people are delaying the purchase of their third Mercedes.
Credit is proving difficult to get hold of, and bankers in the financial cities are struggling to pay the loan on the gold, diamond encrusted jet they brought with their last bonus.

Financial issues have also made a lot of news in China recently – but maybe on a different scale? China is full of extremes – wealth and poverty are probably the most obvious in large cities like Shanghai.

Each day that I drive to work, I am sucked in by the large air intakes of another Porsche, Bentley, or BMW 7 series that fly past.

On a weekend shopping trip to Carrefour (it was empty for the first time ever – I wonder why?) I parked up next to a yellow Lamborghini, which when I returned had been replaced by a Bentley Arnarge to one side, a BMW 740iL behind, and a Porsche Cayenne Turbo a couple of cars down.
I squeezed into my London Taxi, knowing that I was at least individualistic – You see these cars in Shanghai rarely raise an eyebrow even from the local Shanganese anymore, whereas my beloved TXII, turns heads and gasps of WoW -at least I think that's what people are saying?

Mind blowingly, China is Bentleys 3rd largest market, Rolls Royces and Ferrari’s 5th Largest, whilst Porsche predicts that China will be its biggest market in 5 years time, it is already their second biggest overseas market (after the USA).

The rich here are quite happy to flaunt their wealth in the form of imported exotica; large houses, foreign travel, Chanel suits for the women, and Prada handbags for the men!
Its seems ironic that the fake markets of Shanghai, Beijing and Hangzhou are filled with westerners purchasing the latest Rolexy watch, and Louise Vuitton suitcase, whilst the high brand shopping malls are filled with rich Chinese buying the REAL deal!

But while the Chinese super rich grow in their ranks, (At the last count their were in excess of 150,000 Chinese with a personal fortune over $5million and the number of Chinese $billionaires is second only to those in the USA at 130+). The rest of the population still live an incredibly different life, on an unimaginable low income.

The National Bureau of Statistics data shows that annual per-capita disposable income was 13,786 yuan (£985) in urban areas last year, up 17.2 percent. Just over 40% of Chinese live in urban areas and despite the over crowded shopping malls, supermarkets and roads – the average income is less than £3 per day!!!

If you think this is extreme, almost 750 million people live in rural areas where the annual income was 4,140 yuan (£296), up 15.4 percent. Which equates to less than £1 a day.
Along with this increase the central government is considering whether to lift the benchmark poverty line from the current 1,067 yuan (£76) to 1,300 yuan (£92), according to a notice issued by the Poverty Alleviation Office under the State Council. This would bring the Chinese classification of poverty inline with international standards, doubling China’s impoverished population to 80 million overnight, or in other words 80 million people having to survive on less than £0.25p per day.

One of the largest concerns to the everyday Chinese is the rapid increase in food costs, and for all those western students trying hard to survive on Student loans and parent handouts – share a thought for the 20 million or so High School and College students in China, who survive on an incredibly small amount of money – so much so that the Ministry of Finance and the Ministry of Education will raise allowances to 16 million students by 20 yuan (£1.45) a month from March to June, and by 40 yuan to four million needy students.

The government has subsidized students since 1989, but the amount varies according to the area. In Beijing, it is about 60 yuan for each student a month – that’s £4 Great British Pounds per month – or about 2 pints of beer a month at the local bar!

This increase isn’t just limited to students; the government has been keen to act on employers who have kept wages at the legal minimum. In Shanghai the government has just increased the monthly minimum wage from 840 yuan (£60) to 960 yuan (£69) from April 1st.
This is the 16th time the minimum wage has been increased since 1993. In comparison The UK minimum wage is 12,432 yuan (£888) per month (based on 4 X 40 hour weeks) or about an average yearly salary for those living in urban areas!

So how does this add up? Like many visitors, expatriates and local Chinese – I don’t have a clue!! We all see so much wealth, so many imported luxury vehicles, so many bejewelled watches and garish handbags that we cannot work out where the money comes from, perhaps its all down to statistics, whereby a small percentage of an enormous population is still an enormous number? Whatever it is – I am sure it could do with being spread around a bit more, before the natives become hostile!

1 comment:

Anonymous said...

£4 would be lucky to get a pint and a packet of cheese and onion these days! :)