The gap between rich and poor is growing, China's economy has more problems to "headache"

The gap between the wealthy and the middle and low-income classes has been growing rapidly in China in recent times, as a small number of rich people still hold the majority of society's wealth.

The gap between rich and poor in China has been increasing rapidly in recent times. (Source: Getty)

In a report released last week, the Hurun Research Institute said that about 5.12 million families in China have assets worth at least 6 million yuan ($824,000), bringing the total assets of wealthy middle-class families in the world's second-largest economy to 150 trillion yuan by 2024.

Accordingly, the 130,000 richest families in China account for 58%, up 2% from 56% a year earlier. The average wealth of each household is 29.29 million yuan, down from 30.7 million yuan in 2023. In contrast, China's average disposable income per capita is 41,314 yuan in 2024, up 5.3% from 2023.

Beijing needs to do more to narrow the gap between rich and poor in society as the Northeast Asian nation tries to foster a private-sector-led economic recovery, analysts warn.

China is struggling with weak consumption, a sluggish real estate sector, a widening wealth gap and a wealthy elite holding the lion's share of society's wealth.

Economic pressures are weighing heavily on people with low to middle incomes.

Consumption is expected to grow just 3.5% in 2024 — slower than GDP’s 5% growth — suggesting that the income and wealth gap between households is holding back Chinese people’s spending.

“Household consumption is constrained by low household incomes and unequal income distribution,” New York-based consulting firm Rhodium Group said in a report last year.

The group warned that it is difficult to have immediate policies to stimulate household consumption spending growth in the country of one billion people because the imbalance in the economy has been increasing for many years.

“Only a comprehensive restructuring of the economy, financial system and income redistribution led by the government can change that pattern,” the report said.

The widening wealth gap is also evident in data from Shenzhen-based China Merchants Bank (CMB), one of the country's largest domestic lenders focused on wealth management.

CMB said that about 2.3% of accounts hold about 81% of total assets at the bank, representing a very unequal ratio.

In recent years, Beijing has sought to boost incomes for low-income earners through a “shared prosperity” campaign. The government has made Zhejiang, a province known for its booming private economy, a pilot area for policies to boost incomes for low-income earners through state subsidies.

But the campaign has also raised concerns that the wealthy, particularly those in the tech and real estate sectors, could face higher taxes and more scrutiny of their revenue streams.

At a meeting with China's top businesses in February, President Xi Jinping sent a clear signal for the first time about Beijing's support for the private sector to innovate and contribute to the national economy.

However, the Chinese President also noted: “Those who get rich first need to help others get rich too.”

Source: https://baoquocte.vn/chenh-lech-giau-ngheo-ngay-cang-lon-kinh-te-trung-quoc-co-them-van-de-de-dau-dau-306174.html