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They're Getting Rich – in China

This Business of Farming

China copes with rising affluence and class envy

Published on: December 31, 2012
One of the more vivid memories I have from our trip to China last November came when we arrived at a new shopping center in Guangzhoo, a city of 13 million in the heart of the country's east coast economic boom. Here we visited a grocery store nicer than any I've seen in the United States - filled with thousands of products from all over the world, along with fresh fruits, meats and fish, and a wine and liquor section with a $10,000 bottle of champagne. On the floors above, Chanel, Prada, Gucci, Calvin Klein, Dior and Fendi peddled $1,000-handbags, along with even more pricey jewelry, watches, designer clothes and other baubles once sold exclusively in Paris, Stockholm and New York.

This was contrary to the visits we had just made to working class farms in rural regions where incomes barely reached $1.200 per year. On China's go-go east coast, the locals are not only upgrading their diets. They're ditching bicycles for automobiles. According to China's statistical bureau, the country has gone from 5.5 million autos in 1990 to 85 million autos last year.

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As this country continues to embrace capitalism, more of its citizens join the ranks of the wealthy. China is changing to cater to its growing upper class - with some awkward moments that highlightjust how far this country has moved from its ideological base. Many of the new wealthy are taking positions of authority in the communist party, something that would certainly make Chairman Mao turn over in his grave (if he weren't embalmed and on public display in Beijing since his death back in 1976.)

According to the Wall Street Journal, 160 of China's richest 1,024 people, with a collective family worth of $221 billion, now sit in the Communist Party Congress, the legislature and a prominent advisory group called the Chinese People's Political Consultative Conference. "China's legislature, called the National People's Congress, may boast more very rich members than any other such body on earth," claims a WSJ article dated Dec. 27, 2012.

According to our tour guides, a growing number of Chinese average $160,000 in income per year - 20 times more than the average in this prosperous region – and by law are expected to pay $45% in income taxes. Yet, most of the new wealthy are government officials who escape taxes, not through legal loopholes but with old fashioned bribery and fraud.

This has a lot of Chinese steaming mad. As a result, government officials are looked at with disdain. Cleaning up corruption is one of the top priorities for Beijing's new leader, Xi Jinping.

When a country allows its citizens to succeed, it's bound to create class envy. The conflict between party and profit is growing. The divide among classes is not what Chairman Mao had in mind back in communism's glory days. But the Chinese now have a taste of success, and they're not looking back. As long as China's economy continues to grow and more people join the wealthy class, China's leadership should expect little flack from its citizens.

It's what happens when the economy falters that has communist party leaders worried.