One-child policy – Welcome liberalization does not come without risk (3)

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The reason for this is that the vast majority of the fruits of economic development have found themselves concentrated in the hands of a tiny minority of people who were already vastly wealthy, and the problem appears to be getting progressively worse. I will not seek to provide a full analysis here. One simple example will suffice.

Last week Guardian journalist Polly Toynbee (one of the UK’s most vociferous critics of inequality, as well as one of its most fortunate beneficiaries) referred to Income Data Services statistics showing that executive pay for FTSE Directors grew 14% last year, more than five times the increase for the average worker. At a time when austerity for all is being preached by the government, average annual pay for an FTSE 100 Director is now £3.3 million, and the pay of an FTSE 100 Chief Executive has risen by 243% in the last ten years. Meanwhile for the average worker the working week is increasing – largely through unpaid hours – and it seems likely that this generation of school and university leavers will be the first since the Industrial Revolution to find itself poorer than its parents.

China cannot, and must not follow this path to ruin. It cannot try to address the problem of the increasing demands of the elderly and inactive simply by growing its population. It must devote at least as much attention to the problem of unequal distribution of wealth – particularly in the context of the fact that China already has a substantial wealth gap problem.

I am not arguing for a return to “from each according to his ability; to each according to his needs”. That particular theory has already been tested to destruction. Deng Xiaoping was right to allow “some people to get rich first”. But at least the Chinese government seems to be aware of the problem. Fair distribution of wealth is a constant topic of debate, and this too was one of the areas where it was recognized by the 3rd plenum that reform is required. China, with its part-planned economy, has more levers at its disposal than its western counterparts.

And learning from the western experience, the Chinese government may well find that it is a lot less difficult to prevent all the wealth from accumulating in the hands of the richest to begin with, than it is to take it back off them once they have already got hold of it.

The author David Ferguson is a a Scottish writer and journalist living and working in China.

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