Income Inequality In China

1593 Words 7 Pages
Income inequality has become an area of focus for many industrialized nations around the world. Over the last decade, the awareness regarding this income gap has intensified, leading to the broader question of what causes this disparity in income between the top ten percent of society and the bottom ninety percent. Two nations; the United States and China, have approached the issue of income inequality in different ways. The two most important factors that influence the income gap in these two nations are capital concentration and social housing benefits. Therefore, by examining how the United States and China handle capital concentration and social housing benefits will provide a better understanding into why China has been able to curb the …show more content…
This pushed many employees out of state-owned enterprises and into the private sector. Prior to this reform, most of the Chinese population lived on a subsistence level, and few Chinese had significant private wealth. This changed with the 1978 reform, which allowed for more individuals to pursue wealth, but also resulted in capital concentration. A result of more liberal economic policy, capital concentration works to widen the income gap, since more money is being concentrated in the hands of fewer people (as evident in the prior statistics regarding the top ten percent annual income). This is a negative factor for income gap, and thus between these two societies we can see capital concentration as a relatively new phenomenon in China, whereas the United States has had capital concentration since the beginning of its sovereignty. The damage that capital concentration does to the income gap can be reduced through certain government instilled social programs, the most influential being social housing …show more content…
What this social housing program did was allow the government to subsidize rent payments for low-income households, therefore the renter would only have to pay a portion of the rent to the landlord while the government covers the rest. This pragmatic approach to a housing problem for its impoverished citizens makes sense from a humanitarian view. However, when considering the economic repercussions, it becomes evident that the United States Section 8 Housing Program further widens the income gap compared to Chinas social housing program which narrows the income gap. The problem lies in the fact that the United States government is paying private landlords a portion of their tenants rent instead of helping the tenants purchase their own housing. This exacerbates the income gap since this pours money into the landlord’s pocket while subsequently not adding to wealth of its poorest citizens via housing ownership. To further clarify, China has been able to add to its bottom ninety percent citizen’s wealth via the purchasing of houses due to its social housing program, while the United States has seen its bottom ninety percent wealth stagnate because of its social housing program not improving the wealth of its bottom ninety percent citizens. To back up this claim, it is helpful to examine the difference in the bottom ninety percent average income between

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