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May 10, 2009

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Comments

Joe

How is it that Chinese people as a group remain so poor, yet their government is getting rich enough to buy things in the rest of the world? That doesn't seem right at all.

Christine

Hi Joe,

I'm sorry for the delay of this response. I think there many be more than one answer for this phenomenon ranging from politics and the urge to take over more shares of global power to the difficulty of correcting issue of unequal distribution of income in a country with the size like China. That is not to take into account the long historical bias for which economic development and growth almost always start from the Eastern coastal region and major river deltas. To confirm your statement, China now holds one of the largest income gaps in the world with urban households earn roughly 3.3 times more than rural household (2006 statistic).

One can easily argues that gaining more global power through accumulating massive foreign reserves, mostly in US dollars, is possibly easier that correcting domestic internal problems. It’s appeared that the $585bn was meant to bridge some of the gap through improving infrastructure and correcting environmental problems; although I doubt if it’s sufficient.

Best,

Christine

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