Branko Milanovic aruges that the single most serious threat to Chinese unity is increasing inequality. The Gini coefficient increased from less than 0.3 in the early 1980s to 0.468 in 2018. Chinese growth is strongly concentrated in coastal provinces. The richest region in 2019 is Beijing, whose GDP per capita is 5 times as much as the poorest region Gansu. There is an income segregation at the level of provinces.
The Soviet Union held countries with income levels vstly different at the time of the breakup. The underlying cause of breakup has to be sought in this overlap of income and religion or income and ethnicity. Will China suffer the same fate?
China has a long history of a single government, and most population shares the same language, ethnicity and culture. The Soviet Union was disslove by the Boris Yeltsin, the leader of one of its richest rigions, while China’s richest regions like Beijing and Shanghai don’t show any tendency towards secessionism. In 2019, the Anti-Extradtion Movement was triggered in Hong Kong. That is a danger to Chinese national unity. Hong Kong has a higher GDP per capita, compared to Mainland China. The interpersonal inequality is also severe. High goods prices, high rent and low labour income make the poor’s life harder, especially for the young people.
The Global Financial Crisis is generally blamed on financial deregulation. But the origins of the global financial crisis are income inequality. In the US, the enormous wealth accumulated by the rich could not be used for consumption. A huge pool of available financial capital went in search of profitable opportunities. The financial sector became more and more reckless because of the market was short of good opportunities to invest.
The increased wealth at the top was combined with an absence of real economic growth in the middle. Middle-class income stagnation became a recurrent theme in American political life. A way to make it seem that the middle class was earning more than it did was to increase its purchasing power borader and more accessible credit. People began to live by accumulating debts.
China’s economic miracle seems to have been a product of series of serendipitous, unique and unrepeatable circumstances. The incredible economic rise of China was achieved by using a mixture of recipes, which is very different from the Washingto consensus. There is no atempt to package these policies, explain how they might work elsewhere, export a specifically Chinese model of develpment or economic ideology.