In the run-up to Shanghai's "Black Tuesday" stock market plummet, would-be Chinese investors were opening new brokerage accounts at a phenomenal rate of 90,000 a day. This in a country where, as China Development Brief's Nick Young reminds us in a fantastically informative new paper, "How Much Inequality Can China Stand?" at least 200 million rural people survive on less than $240 (U.S. dollars) per year.
Young's 35-page analysis of the politics and economics of inequality in China is the most current, concise, readable and evenhanded look at what's going on beneath the headlines in China that I've read in a long time. (Thanks very much to Lyn Jeffery at Virtual China for passing on the link.) If you want to know exactly what plans the Chinese government is implementing to try to address the accelerating inequality between rural and urban populations, his paper is the place to go. But just for fun, I recommend reading it in conjunction with today's newly published roundup of trends in global markets by Asia Sentinel's Philip Bowring. Bowring paints a gloomy picture, predicting a "Great Global Asset Price Collapse" as a long overdue "payback from sustained overindulgence" all over the globe. (And for a moment this morning, when the Dow plunged 200 points immediately after markets opened in New York, following renewed declines in Shanghai and Tokyo, that payback seemed disturbingly imminent. But New York has since partially recovered.)
Bowring's analysis appears targeted at the well-heeled investor who is pondering exactly which Asian currency to buy to hedge their holdings in U.S. dollars and commodity futures bets. It's a bearish, big-picture stab at global economics that you might want to pay attention to if you are trying to understand what the new activity by all those hundreds of thousands of stock market punters in Shanghai implies for New York and London and Tokyo. But Young's paper brings to the fore the awesome paradox faced by China's leaders. They are simultaneously dealing with China's relatively new role as an integral part of global high finance (which brings with it all kinds of pressures from the West, on such things as intellectual property protection and currency valuation) and at the same time managing an incredibly delicate transition in which one sector of society is shooting into international jet set territory, while hundreds of millions more struggle desperately to put rice on the table.
No wonder the current Communist leadership no longer emphasizes the dialectics of class struggle. China's greatest successes pose their own threat. As Young magisterially finishes off:
The Communist Party is nowadays none too keen to promote a class analysis of society, and most Chinese citizens old enough to remember the heyday of Maoist ideology would also shrink from a return to the language of class conflict. Indeed, the notion of "harmonious society" seems framed precisely to transcend that kind of discourse...
It is not, of course, the case that only perfectly just societies are politically sustainable: people throughout history and across the world have proved capable of enduring and even accepting huge inequality -- under main force, in some cases, but often also out of a sense that this is the natural order of things. But a high-paced and market-oriented consumer society -- where acquisitiveness is consciously promoted, personal success publicly applauded and affluence often openly flaunted -- can hardly help but raise expectations generally, perhaps especially among younger generations who have fewer memories of past trials. Disappointed expectations, linked to a sense of social justice, could prove difficult to handle.