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China’s rapid economic recovery from the coronavirus pandemic masks the fact that the gap between rich and poor remains wide, holding back a stronger turnaround in consumption.
While official data Monday showed growth exceeding pre-virus levels in the fourth quarter, a deeper look at the figures show the poorest Chinese still earn only a fraction of the income of the wealthy.
Read more:China’s Growth Beats Forecasts, Aiding Global Economic Rise
The richest 20% of Chinese had an average disposable income of more than 80,000 yuan ($12,000) last year. That was more than triple the median and 10 times what the poorest 20% received, according to data released by the National Bureau of Statistics.
Millions of Chinese workers lost their jobs early in 2020 as lockdowns to contain the virus hit demand across the economy and shuttered factories, restaurants and shops. The initial lockdowns in January and February also trapped many of them in their hometowns after they traveled there for Lunar New Year celebrations and were unable to return to their workplaces in the cities.
When lockdowns were lifted later in the spring and many businesses reopened, millions of workers didn’t return — official data showed the number of rural migrant workers dropping by 5.2 million in 2020 from 2019. And while the governmentsaid it created almost 12 million new urban jobs last year, the official jobless rate only tracks people who have been resident in cities for at least six months.
Even though growth in nominal income for the poorest Chinese grew at a faster pace than the wealthiest last year, the effects of lost income and jobs can be seen clearly in consumer spending. Retail sales fell 3.9% in 2020 from the previous year, while per-capita consumption, after adjusting for inflation, dropped 4%. The almost 17% drop in spending at restaurants last year hurt not only the incomes of business owners, but also the pay of their workers and delivery drivers.
In contrast, China’s industrial economy hit new records in 2020. Crude steel output roseabove 1 billion tons, and the production of rolled steel, pig iron, and aluminum also hit new highs as exports and investment in infrastructure and real-estate climbed, spurring demand for metals.
Theexport and investment-led rebound will likely make it possible for the government to achieve its target of doubling the size of the economy by 2021 from 2010’s level. However, for many Chinese workers, it doesn’t mean they’ll feel quite as well off.
— With assistance by James Mayger, and Tom Hancock
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