Page 30 - The South China Business Journal
P. 30
MMUNITY NEWS
Common Prosperity
in an Era of Wage
Polarization?
By the Stanford Center on China’s Economy and Institutions (SCCEI)
China's leader Xi Jinping recently launched a campaign for Common Prosperity, whereby
the fruits of national development are shared more evenly across society. New research
suggests that among the main obstacles in reaching this goal is China's growing income
and wealth inequality. The capacity of China's leaders to address income inequality has
implications not only for the success of the Common Prosperity platform, but also for whether
China can escape the middle-income trap. What is causing China's rising income disparities?
What might it take to address them?
The data. Researchers gathered information on decade of the 2000s have induced manufacturers
employment and wage trends using annual census to automate and offshore. Employment in
data from 2004 to 2017, published by the National construction and manufacturing has fallen,
Bureau of Statistics of China, in combination with driving low-skilled workers increasingly into the
the employer survey data compiled by China's informal "gig" economy — temporary or informal,
Bureau of Industry and Commerce. Researchers noncontractual work that provides little to no
also gathered employment data for migrant worker protection. The supply of these informal
workers from the Annual Report of Monitoring workers has accelerated in recent years, but
Survey on National Rural-Urban Migrant demand for their services has not kept pace. This
Workers from 2010 to 2018. Lastly, data on 2020 mismatch has caused the wage growth for low-
employment rates were drawn from a survey of skilled workers in the informal economy to decline.
rural workers in 700 villages from six provinces.
Meanwhile, as the size of China's middle class
China’s evolving economy. China's 1978 expanded in the 2010s, the demand for high-
reform policies launched one of the fastest periods skill services like high technology, banking, and
of economic growth in history, owing largely to its education has grown quickly. Professionals able
vast, underutilized rural labor supply. Demand for to find employment in the high-skill service sector
this low-skilled labor outstripped supply for 30 have enjoyed faster wage growth.
years, causing wages to rise.
Wage polarization emerges. In 2004, around
As of the mid-2010s, however, research suggests 67% of total employment was in the formal
that China may have entered a new phase of economy, but by 2017, this percentage had fallen
economic development. Urban construction to less than 44%. By contrast, China's informal
has slowed and rising wages during the first sector has grown rapidly, accounting for nearly
Urban employment: 2004-2017 Comparing wage growth rates: 2010-2014 and 2015-2017
27 AMCHAM SOUTH CHINA
Common Prosperity
in an Era of Wage
Polarization?
By the Stanford Center on China’s Economy and Institutions (SCCEI)
China's leader Xi Jinping recently launched a campaign for Common Prosperity, whereby
the fruits of national development are shared more evenly across society. New research
suggests that among the main obstacles in reaching this goal is China's growing income
and wealth inequality. The capacity of China's leaders to address income inequality has
implications not only for the success of the Common Prosperity platform, but also for whether
China can escape the middle-income trap. What is causing China's rising income disparities?
What might it take to address them?
The data. Researchers gathered information on decade of the 2000s have induced manufacturers
employment and wage trends using annual census to automate and offshore. Employment in
data from 2004 to 2017, published by the National construction and manufacturing has fallen,
Bureau of Statistics of China, in combination with driving low-skilled workers increasingly into the
the employer survey data compiled by China's informal "gig" economy — temporary or informal,
Bureau of Industry and Commerce. Researchers noncontractual work that provides little to no
also gathered employment data for migrant worker protection. The supply of these informal
workers from the Annual Report of Monitoring workers has accelerated in recent years, but
Survey on National Rural-Urban Migrant demand for their services has not kept pace. This
Workers from 2010 to 2018. Lastly, data on 2020 mismatch has caused the wage growth for low-
employment rates were drawn from a survey of skilled workers in the informal economy to decline.
rural workers in 700 villages from six provinces.
Meanwhile, as the size of China's middle class
China’s evolving economy. China's 1978 expanded in the 2010s, the demand for high-
reform policies launched one of the fastest periods skill services like high technology, banking, and
of economic growth in history, owing largely to its education has grown quickly. Professionals able
vast, underutilized rural labor supply. Demand for to find employment in the high-skill service sector
this low-skilled labor outstripped supply for 30 have enjoyed faster wage growth.
years, causing wages to rise.
Wage polarization emerges. In 2004, around
As of the mid-2010s, however, research suggests 67% of total employment was in the formal
that China may have entered a new phase of economy, but by 2017, this percentage had fallen
economic development. Urban construction to less than 44%. By contrast, China's informal
has slowed and rising wages during the first sector has grown rapidly, accounting for nearly
Urban employment: 2004-2017 Comparing wage growth rates: 2010-2014 and 2015-2017
27 AMCHAM SOUTH CHINA
