In the last decade, wealth has rapidly grown in China. However, recent data shows that the country's wealth is flowing into the pockets of a very small number of people. Scholars believe that the middle class is actually diminishing in China, and that such wealth polarization will increase social tension.
According to the Hong Kong-based newspaper Wenweipo, at the Eleventh Chinese National Political Consultative Conference Standing Committee meeting in June, Political Consultative Commission member Cai Jiming said that a report conducted by Chinese authorities stated that a mere 0.4 percent of the people in China controlled 70 percent of the country's wealth.
The level of concentration is higher than that of the United States. Cai also said that such concentration would result in a distorted consumer pattern in the market place.
Mainland Chinese experts believe that in mature economies such as Japan and Australia, about 5 percent of the households control 50–60 percent of the country's wealth.
Another report shows that by the end of March 2006, 27,310 people in China had over 50 million yuan (US$7.3 million) in assets each; 3,220 people had more than 100 million yuan (US$14.6 million) in assets. Of the latter group, 91 percent or 2,932 were children of government officials. Altogether, they owned more than 2.045 trillion yuan. Most of the wealth was obtained thanks to their families’ ties to the Chinese Communist Party's power.
This report received much attention, for as the Chinese public becomes aware of the great wealth polarization, social conflicts may intensify. On the one hand, the global economic recession resulted in increased unemployment in China; many are barely getting by. On the other hand, according to the Chinese-language version of Forbes Magazine, from June 2009, China has become the most-favored luxury goods market in the world.
A single-family house can cost as much as 380 million yuan (US$52 million). A yacht can cost 140 million yuan (US$19 million). A car can cost 43 million yuan (US$5.9 million). A luxury watch can cost 18 million yuan (US$2.5 million). There is great enthusiasm in China's market for these luxury products.
Dean Zhou Xiaohong of the Social Studies Institute at Nanjing University said, "In China, income polarization hurts not only those at the bottom, but also the middle class."
Zhou said that between 1994 and 2004, at least 7.7 million small businesses closed. The environment for small businesses and entrepreneurs is worsening. The spread of social classes is "M" shaped, indicating a weak middle-class. The high concentration of wealth in the very upper class means that other social classes will continue to weaken.

Central News Agency