How Much Do Chinese Make? The Answer Depends on Which “Chinese” You’re Looking At

Posted on January 21, 2012

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To many who live outside China, Chinese seem to be getting richer in a no-less-than-eye-popping fashion. One doesn’t have to look far to be impressed by Chinese’s wealth and spending power. Almost overnight, fleets of Chinese travelers are seen on shopping sprees in boutique stores and fancy malls overseas for everything from designer handbags, clothing, shoes, perfume to expensive watches and jewelry. The Chinese’s appetite for, mind it, not only cars but luxury cars amazes manufacturers like Rolls-Royce, who finds the country overtaking the US becoming its largest market in 2011. No wonder China has become the world’s largest consumer of luxury goods, according to a report by World Luxury Association in 2012. But that shouldn’t be too surprising since China also has the second most “ultra high net worth individuals”–individuals who have net wealth of 50 millions and more–in the world, only after the US (whose number is seven times of that of China), as Credit Suisse Research’s 2011 Global Wealth Report shows.

But really? Are Chinese really that rich? Yes and no, depending on where you look. Yesterday, the National Bureau of Statistics of China (NBSC) published a report titled “The 2011 Income Growth of Urban and Rural Residents” (Zh), which shows that, despite their high growth rates, average Chinese’s income levels are nowhere near what Americans would consider as “well off.” The report also shows huge income disparity between urban and rural residents.

The report is based on a survey of 66,000 urban and 74,000 rural households in all 31 provinces, autonomous regions and municipalities across China in 2011. According to the report, the average annual income for urban residents in 2011 is 23,979 yuan ($3,786), and the per capita annual disposable income for urban residents is 21,810 yuan ($3,444). After inflation adjustment, the growth in disposable income is 8.4% compared to that in 2010. (Just to give you some sense by comparison, the per capita money income of Americans in 2009 is $27,041, over seven times as much as that of Chinese urban residents. The poverty line for one person household in 48 Continuous States and the DC in the US in 2011 is $10,890 and $3,820 for each additional person.)

This is not the extravagant picture we see depicted in many media. If we look at the figures of the rural residents, we will see even starker contrast. According to the report, the per capita annual net income for Chinese rural residents in 2011 is 6,977 yuan ($1,102), with a growth of 11.4% compared to 2010 after inflation adjustment. That means that a rural Chinese makes only a third of what her/his urban counterpart makes and 4% of what an average American makes.

It needs to be noted that many “rural residents,” whose residential status is determined by their hukou, live and work in the cities as migrant workers. According to the latest statistics available, the number of rural residents working in cities almost reached 150 million in 2009. Officially as “rural residents,” these are industrial workers rather than farmers. These workers’ wages, 2,963 yuan ($468) per capita annually, contribute 42.5% to the total annual income for rural residents, according to the Income Growth report.

Among these migrant workers, about 100 million are a “new generation migrant workers” (新生代农民工), born between 1980 and 1995, as the statistics (Zh) from All China Federation of Trade Unions (ACFTU) show. They make an average of 1,747 yuan ($276) a month, about half of what employees who have the urban status. More than half of these young migrant workers are single, partly because of their low income and the increasingly expensive living in cities (follow-up post coming up soon).

So you get the picture. Chinese are not wealthy, especially rural Chinese and migrant workers, who, ironically, have created perhaps most of the wealth that’s been fueling China’s rise as a world economic power. And as the richest of the rich are busy planning on leaving the country with the wealth they’ve accumulated in China, these farmers and workers are the ones who will stay, and work, and live on this land of wonders and sacrifice.

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