Caixin
Jun 06, 2020 06:54 PM
OPINION

Opinion: China Has 600 Million People With Monthly Income Less Than $141. Is That True?

There are still some 600 million people whose monthly income is barely 1,000 yuan ($141) in China, Chinese Premier Li Keqiang said last month at a press conference following the annual session of the country’s top legislature.

Li’s remarks sparked heated discussion, with many doubting whether China really has so many people living on such low incomes.

The premier’s words are true. After analyzing a random sample of 70,000 families collected by the National Bureau of Statistics, our team at the China Institute for Income Distribution at Beijing Normal University found that nearly 42.9% of the people in the sample had a household monthly income per person of no more than 1,090 yuan in 2019.

Op-income chart

If that statistic holds true nationwide, it would account for more than 599.9 million people.

Although China’s rapid economic growth in recent decades has propelled many people into high-income brackets, we mustn’t ignore the fact that the majority of the population fall into the low- or middle-income groups.

Many of them are still living on or near the bread line. They mostly remain out of sight and have few channels to make their voices heard. In that sense, they are society’s silent majority.

The income we talk about here is disposable income, not average salaries. Disposable income is the money left over after paying income tax, social insurance premiums and other essential fees. It reflects real individual and household livelihoods, and so is globally seen as one of the most important figures to judge a country’s development.

Who are the 600 million people Li spoke of? The survey showed that 75.6% of them live in rural areas, while 36.2% and 34.8% live in less-developed central or western China, respectively. They generally receive an average of about nine years of schooling — enough to finish middle school, but not to progress beyond that.

Low-income families support more elderly relatives and children than higher-income families. Nearly 39% of the 600 million are either older than 60 or younger than 16, a higher proportion than the equivalent for higher-income groups.

Some foreign politicians have claimed that China is no longer a developing country and should be treated as a developed nation. Their words confound some people’s minds in China, who make a misjudgement that China has become a high-income country or will become one soon.

China had an annual disposable income per capita of 30,733 yuan last year. Americans, meanwhile, earned more than 10 times that figure.

That gap shows that China is still a typical developing country dominated by a low-income population. The pattern of income distribution in China is still far away from the classic olive shape, which has a large middle class and a short gap between rich and poor.

We have to remain clear-headed about how much Chinese people really earn and where China stands globally. Our status as the world’s largest developing country will not change for now.

Wan Haiyuan is a deputy dean of the China Institute for Income Distribution at Beijing Normal University. Meng Fanqiang is a postdoctoral researcher at the same institute.

This commentary has been edited for length and clarity.

Contact translator Guo Yingzhe (yingzheguo@caixin.com) and editor Matthew Walsh (matthewwalsh@caixin.com)

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