Global Policy Forum

In China, an Unsettling Gap Grows


By Evan Osnos

Chicago Tribune
July 15, 2007

Luxurious skyscrapers sprouting in Beijing are the latest symbols of a country's boom -- and of its inequality. The Yintai Centre's main tower is Beijing's tallest and, for the moment, most expensive skyscraper. It is crowned by a sparkling glass pyramid restaurant atop a sky-level Park Hyatt hotel. Luxury apartments in the building have set a city record by selling for $550 per square foot, the developer says. To put that in perspective, a single square foot in the building costs more than 70 percent of what a typical rural citizen of China earned in all of 2005.

That gaping divide is alarming leaders of the world's largest socialist state. In a sign of their unease, Beijing abruptly ordered developers this summer to remove all billboards touting lavish new property. The Communist Party would rather citizens hear its own message: a call for "harmonious society" and "overall well-being," a retro retort to the city's Rolls-Royce-size appetites. The conflict between the urge to consume conspicuously and the struggle for egalitarianism is the central contradiction in China's rise. And that contradiction between the drive for growth and the primacy of Marxist-Leninist socialism has never been starker.

China is more prosperous and cosmopolitan than at any time in history. Yet the gap between the haves and have-nots is widening, fueling leaders' fears of social instability despite repeated government campaigns to stem it. For a city in transition, billboards that urged buyers to "indulge" in a luxury sedan or "be a foreigner's landlord" became politically provocative. "As a worker, it's like being on a bike when you see an Audi drive by. How does it make you feel?" said Wu Tianli, 42, an embittered shopkeeper whose home was razed for development. Luxury advertisements first drew scrutiny in May, when state media reported that Beijing Mayor Wang Qishan had condemned ads that conjured a lifestyle "beyond the reach of low-income groups and are therefore not conducive to harmony in the capital."

His concern reflects trends often outshone by China's impressive new skylines. Two decades of growth have slashed poverty and minted a growing middle class, but that middle class is not growing fast enough to offset the widening gap between the top and bottom. Urban incomes are now more than three times those of China's 750 million rural residents, whose annual earnings averaged just $428 in 2005, the latest year for which official statistics were available.

The top 10 percent of Chinese now hold 40 percent of all assets; the bottom 10 percent have just 2 percent of assets, according to a study by the Chinese Academy of Social Sciences. In 2001, then-Premier Zhu Rongji was asked whether he worried about the gap, which sociologists measure with a statistic known as the Gini coefficient. "Not yet," Zhu said, because China had yet to reach the "the internationally recognized danger level" of 0.4, the point when social unrest becomes likely. At last count in 2005, the World Bank put China's Gini coefficient at .45. That social inequality is greater than in the U.S. and India, and approaches the vast gap associated with Latin America.

China's leaders have already tried to narrow the gap. The party that rose to power more than a half-century ago on the back of a proletarian revolution has adopted the goal of a "harmonious society" as the buzzword for a more equitable distribution of wealth and opportunity. President Hu Jintao and Premier Wen Jiabao have instituted steep luxury taxes on yachts and jewelry, while eliminating levies on farmers. But the growth in China's ritziest areas shows no sign of slowing.

Factories out, skyscrapers in

"We are only 7 years old. We are only a child," Cheng Hong, said of the fast-growing Central Business District, the heart of Chaoyang neighborhood, where she is the deputy director. Less than a decade ago, the area held old state-run factories and low-rise housing. Today, it is a thicket of skyscrapers, including the new Yintai Centre, which boasts three towers that loom above the Avenue of Eternal Peace east of Tiananmen Square.

Among its other luxuries, the building offers special elevators for penthouse residents and sound-reducing glass. Privately, prospective buyers are treated to a video that spares no adjective in service of promotion, calling the building "the magnum opus of international business" and "elegance with an urbane flair." But in public, Yintai developers have adopted a noticeably low-key approach, avoiding the hyperbole that has gotten other projects in trouble. "We don't describe ourselves as luxury or super-luxury," said Lily Zhu, the vice general manager. The building stands on what was the Beijing No. 1 Machine Tools plant, one of the first state-run factories established after the 1949 revolution. It moved to the suburbs years ago, and in 2001, the sprawling factory was dynamited to make way for the towers.

That cycle of relocation and demolition has become a constant backdrop in this capital -- never more so than in the year leading up to Beijing's hosting of the 2008 Olympics. The city has razed acres of ancient neighborhoods of narrow alleys and low brick homes to make way for new construction. Some residents go willingly, attracted by the prospect of compensation and a new home in an insulated building with toilets, something most alley homes lack.

'Where is the harmony here?'

But in other neighborhoods, residents bitterly resist relocation. They resent the wealthy developers who stand to profit and the leaders they blame for failing to make them part of China's boom. "I don't call it harmonious society. I call it 'blood-sucking society,'" said Zhou Li, a 37-year-old housing activist. "Where is the harmony here?" As she spoke, she stood in the timeworn Chongwenmen neighborhood south of Tiananmen Square, a vast area slated for redevelopment. Within minutes, three men from the district government arrived on their daily rounds to encourage residents to leave peacefully. They pasted a handbill on a tiny, bedraggled shack made of bricks and stone. The poster told the occupants they had "4 days left to move" and receive compensation.

That shack belongs to Ren Yi, 40, an out-of-work laborer and father of two who has lived there for 20 years. Shirtless on a sweltering afternoon, he watched the poster go up. He rubbed his head. He seemed resigned to move, though he doesn't know where his family will go. "This is being done for commercial development," Ren said. "The government should be involved in helping the people protect their safety -- not helping the developers." His family of four crowds into 107 square feet of space. He says the local government is offering $7,100 for the place, not a large sum to find a home in the new Beijing.

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