China seems to be on the march at the moment. It is tightening its grip on Hong Kong, conducting large scale exercises and manoeuvers near Taiwan as a warning, and in its standoff with India has killed a score of Indian soldiers. It is certainly taking its chances as the West, particularly the USA, tears itself apart.

China also seems to have a lot of advantages. It has an authoritarian government which is able to control information out of and into the country. It is able to crack down on dissent with more ruthlessness than most and thus keep control of its people through fear and repression. It is led by men who are not answerable to their people and thus have no popular accountability for their actions. It is a large country with a rapidly growing economy and is relied on by a large number of countries for supplies of medicines, machinery and high end technology.

But we should not forget that, like all other countries, China has a host of problems. One of these is a massive poor population. As this Financial Times article describes, the CCP leadership is trying to publicly play down Chinese poverty. President Xi Jinping declared in March that China had made “decisive achievements in eliminating poverty…We have almost met our goal and have basically eradicated poverty on a regional level.”

However, the reality is a little different. Premier Li Keqiang admitted that more than two-fifths of the population makes less than USD140 a month. This is hardly enough to rent a home in a big city, but living in a big city is a requirement for the many million of Chinese who wish to enjoy the job opportunities that urban living brings.

Part of the disconnect is that the CCP’s definition of poverty is Rmb3,500 per year (about USD500). The World Bank’s definition is Rmb4,800 per year. Of course changing the threshold allows one to reduce poverty, but it doesn’t change the actual lives of the poorest Chinese. And, according to non-Government experts like Li Jinlong from Hunan University, the bulk of China’s rural population and a significant portion of its urban residents are barely making ends meet.

Many rural residents are particularly trapped because if they chase the jobs in the cities, they can run afoul of the hukou system of household registration. Most cities are reluctant to issue hukou to foreign workers because they add pressure to social services like healthcare and education. Many rural workers are therefore forced to return to the countryside in the absence of a social safety net in the cities.

Thus, there are hundreds of millions of Chinese who are desperately poor and have little prospect of climbing the income ladder. The CCP may massage the numbers to obscure this fact, but it still exists.

There are two Chinas: one consists of the big cities along the coast which are international-facing, export dependent and rich; and then there is the China of the hinterland, poor and rural. This is a weakness that the CCP will have to navigate. Trying to keep the two Chinas together will be taxing. Then again, an external war can always be used to keep the country together I suppose…

 


Marcus Roberts writes for Mercatornet and his article is printed with permission