Converting wealth gap into an 'olive'
March 31, 2012, Saturday
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Print Edition
Print Edition
To sustain China's economic growth is not only to create more local billionaires and Fortune 500 companies. In the future, the country needs to foster the development of a number of commercial organizations whose main task is to nurture the middle class.
Up to 105 mainlanders worth more than US$1 billion made it onto the Global Rich List compiled by Forbes magazine in 2011, with China taking honors as the world's second-largest home to the super rich after the US.
With the strong ability to create wealth, China now holds a lion's share of the world's "billionaire club," but its economic and social development should not stop there.
To ensure the sustainability and stability of its economy, China needs to place emphasis on building an inclusive growth model and a harmonious society. The prerequisite for achieving these goals is a dominant middle class.
In a period of rapid economic growth, the existing social structure is likely to become unstable due to its imbalances. Many sociologists and economists have suggested building an olive-shaped structure, with the middle class as the largest proportion of its population, and a small scale of the rich and powerful, and the poor and weak on both ends.
When the middle class is the mainstream, a society tends to be more stable and rational. To help it evolve into this new structure, the government and social communities should facilitate the development of a number of important commercial organizations that can bring world-class incomes to their employees and world-class investment returns to their shareholders.
Their responsibility is to change the landscape of China's wealth distribution, where the richest 0.003 percent of the population owns 24 percent of society's total fortunes.
In contrast, the poorest 18 percent still live under the poverty line, and only 11.19 percent of the population is said to have joined the middle class. Such a yawning gap between the rich and the poor is a price paid for China's economic boom, and creates a threat to its current social stability. Many countries have suffered from turbulence caused by wealth disparity.
How to narrow the gap and build a sustainable economic growth model is the key to pushing China through the current and future transformation.
It took Japan only 30 years to become a middle-class society during its high-growth period from 1955 to 1985. Major Japanese companies increased salaries to help more employees enter the middle class.
But not many Chinese companies have realized it is their core social responsibility to help nurture the middle class.
Up to 105 mainlanders worth more than US$1 billion made it onto the Global Rich List compiled by Forbes magazine in 2011, with China taking honors as the world's second-largest home to the super rich after the US.
With the strong ability to create wealth, China now holds a lion's share of the world's "billionaire club," but its economic and social development should not stop there.
To ensure the sustainability and stability of its economy, China needs to place emphasis on building an inclusive growth model and a harmonious society. The prerequisite for achieving these goals is a dominant middle class.
In a period of rapid economic growth, the existing social structure is likely to become unstable due to its imbalances. Many sociologists and economists have suggested building an olive-shaped structure, with the middle class as the largest proportion of its population, and a small scale of the rich and powerful, and the poor and weak on both ends.
When the middle class is the mainstream, a society tends to be more stable and rational. To help it evolve into this new structure, the government and social communities should facilitate the development of a number of important commercial organizations that can bring world-class incomes to their employees and world-class investment returns to their shareholders.
Their responsibility is to change the landscape of China's wealth distribution, where the richest 0.003 percent of the population owns 24 percent of society's total fortunes.
In contrast, the poorest 18 percent still live under the poverty line, and only 11.19 percent of the population is said to have joined the middle class. Such a yawning gap between the rich and the poor is a price paid for China's economic boom, and creates a threat to its current social stability. Many countries have suffered from turbulence caused by wealth disparity.
How to narrow the gap and build a sustainable economic growth model is the key to pushing China through the current and future transformation.
It took Japan only 30 years to become a middle-class society during its high-growth period from 1955 to 1985. Major Japanese companies increased salaries to help more employees enter the middle class.
But not many Chinese companies have realized it is their core social responsibility to help nurture the middle class.
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