Widening wealth gap creates more social and economic risks: China Daily

Pedestrians along Nanjing Road in Shanghai.
Pedestrians along Nanjing Road in Shanghai. PHOTO: BLOOMBERG

In its editorial on Jan 21, China Daily urges policy makers to address growing wealth inequality.

The world's 62 richest people have as much wealth as the poorest 3.6 billion people, half the world's population, according to a new report by Oxfam International. 

Half of the 62 richest people are from the United States, 17 from Europe, with the remainder from China, Brazil, Mexico, Japan and Saudi Arabia. 

The mega-rich have seen their net worth soar over the last five years and the top 1 per cent now own more than all the rest combined. 

China also faces risks from its excessive concentration of wealth.

First, its continually widening wealth gap threatens social stability. 

In both developing and developed countries, as societies develop a more evident pyramid structure it gives rise to increasing social discontent.

Second, the more money rich people have, the more risks they face, and the more speculation they make to offset the risks, the more they increase the risks. As a result, governments are afraid of setting off a chain reaction so they rescue financial institutions at risk of failure with government money, thus further widening the inequality.

Third, in some developed countries employers take advantage of the free flow of capital to drive down labour costs. If the workers complain about their wages or working conditions, employers can simply relocate their factories. 

The average wage of a blue-collar worker in the United States, taking into account inflation and other factors, is no higher than it was in the 1970s.

It is harmful to a society's sustainable development when the majority of the wealth is the hands of a few, and China is now trying to more equitably distribute wealth.

China Daily is a member of The Straits Times media partner Asia News Network, a grouping of 22 newspapers seeking to promote coverage of Asian affairs.