Globalization and Inequality in China
As a matter of public rhetoric, few governments lay as much stress on the issue of rising economic inequality as that of China. The People’s Republic may be the world’s only major nation to have the goal of a “harmonious society” as a formal policy objective.1 Chinese leaders regularly state their concern that the high inequalities that have emerged during China’s reform period stand in conflict with that obj ective. This posture contrasts with that of political leaders in Europe, where policy discourse emphasizes the motifs of “fiscal consolidation” and “labor market reform,” and also with the United States, where stated official concerns about inequality are submerged in an anodyne rhetoric of educational opportunity and skill development.
In China, the “actual issue” is fairly clear to everyone: the rise of a wealthy coastal zone, deeply integrated with the world economy, in contrast to an interior that, even though growing rapidly by its own past standards, remains quite far behind. To this one may add the effects of public and private investment in the biggest cities—especially Beijing, Shanghai, and Guangzhou—in raising these citadels to heights of prosperity never before seen in China. And to that one should also add the effect of market structures on the use of market power, increasing occupational differentials inside every region and city, and permitting accumulation of large private fortunes for the first time since the revolution. All of this has a vast, distorting effect on the Chinese population, pulling them to the cities despite a draconian system of internal migration control, and creating an extreme form of inequality-induced unemployment as the floating population looks for work.
Seen from the West, discussion of the “rise of China” often reflects preoccupation with the role of manufactured exports in Chinese economic growth, a sector conspicuous in Western markets and allegedly advantaged by China’s policy of pegging the renminbi (RMB) to the U.S. dollar at a fixed (or at best