(Editor’s note: Please welcome our first post by contributing blogger Sophia Mendelsohn about some of the benefits of luxury consumption and “lifestyle” publications in China!)

China’s public is receiving a mixed message from mainstream media. On the one hand, they are told development is destroying the environment. On the other hand, the messages equate luxury and consumption in China with the ever sought after higher living standard.

This means that an effective media campaign promoting environmental protection is going to have to embrace the inevitable consumption by offering the consumer a green option that is sexy and fashionable. This also serves to counter the idea that environmental problems are too large for the average person to minimize.

Despite the common conception that state-controlled media doesn’t report bad news, a large part of the environmental news in China covers major disasters in country. Much of the rest goes to playing the blame game with the U.S. and other developed nations.

In December 2005, chemical pollution in the Song Hua River near Harbin, endangered the water supply for millions, making for some very telling pictures. In 2007, Taihu Lake near Shanghai turned blue and green from human and industrial pollution. That same year, over 15,000 kilograms of dead fish floated en masse to the surface of Wuhan’s East Lake. The bad news was that this was not the first time.

(Photo of Taihu Lake via PacificEnvironment)

These events, and others, were covered heavily by state-run media, discussed on personal blogs and in chat rooms. With this kind of coverage, it is easy to understand the belief that environmental problems in China are beyond the control of the average person.

The other environmental news that filters down to mainstream press in China is often focused on blaming the U.S. and other Western nations for climate change and global warming. Part of that argument is that the West has an excessively lavish a lifestyle and consumes too much, thereby emitting greenhouse gases.

Of course, you don’t have to look farther than Shanghai’s Nanjing Xi Road or Beijing’s Wangfujing to see the”luxurious” Western nations are in good company. And it seems the more the merrier. Gucci plans to open another five stores in China within the next year.

As luxury brands barge their way into the market, they are accompanied by their close cousin, the lifestyle magazine. Though in a twist away from the stereotype, many of these magazines are talking about more than just clothing and movie stars. Recently a number of lifestyle magazines have featured “green stories,” covering everything from eco-trends to socialite environmental heroes.

Although it would be fair to grumble about a certain amount of “greenwashing,” lifestyle publications serve an important role in educating the Chinese public about environmental issues. “Green glam” brings an element of sexiness to the change and effort that is involved in improving a new consumer’s lifestyle.

They also offer a softer, more approachable angle than newspapers running stories about whole eco-systems being taken down by heavy industry. Without these publications, the public’s main access to eco-issues would be all doom and gloom.

Trends Magazine’s Chinese-language publications let loose a frenzy of green stories in ‘07 and look to be keeping it up in ‘08. Trends publishes about every glossy magazine you see on the corner kiosk—think Cosmo, Bazaar, Esquire, National Geographic Traveler, and Men’s Health, to name a few.

Trends established a website focused on their eco-travel for their readers. The site opens to words like “trendy environmental protection” and panoramic views of snow-topped mountains in Tibet and other western provinces in China.

You could fairly argue that the very snow photo-shopped onto the site will melt away with the carbon emissions produced by traveling to them. However, with the Chinese domestic tourist industry moving around one billion people a year, we can safely argue that those emissions are going to be emitted regardless.

But sites like this still serve an important purpose. They reach out to tourists with plane ticket already in hand and alert them to the drastic increase in tourism, and how it is affecting the local eco-system. While promoting travel, these sites declare environmental protection must be taken into account. In addition, Trends directs readers to non-profit environmental organizations like Greenpeace and WWF China. It’s true that they are not promoting tents over five-star hotels, but awareness like this on an attractive platform is a step in the right direction.

Just like China’s consumption, “green glam” coverage does not stop at travel. The upscale fashion magazine, Bazaar (November 2007) suggests easy steps you can take in your own home to reduce your environmental impact, like shutting off lights and successfully making LEDs seem as precious as Chanel. It also promotes the “I am not a plastic bag” bag as more than an extra purse but to actually cut down on use of plastic.

Like travel and fashion, glamorous eco-friendly weddings are not to be left behind as China revs up.

Cosmo (July 2007) covered green weddings particularly well, making a direct connection between the extravagance of a wedding and the extra greenhouse gases produced as a result. Similar to the American way of measuring everything in football fields, the Chinese-language site notes “the carbon emissions from your wedding could not even fit in six swimming pools.”

This month Esquire magazine has green billboard advertisements up with banners declaring the publication to be a fighter for the environment. You can find them in Shanghai’s main shopping street, right next to the permanent Tiffany & Co. billboard.

While organizations that promote the restraint and reduction of consumption deserve great credit, we need to look at alternative strategies as both shopping and pollution spread out from Beijing and Shanghai to every corner of China.

Lifestyle media’s trendy promotion of small environmental changes in an answer to two problems.

• One, it empowers a public easily left feeling helpless by the scale of the problem, or vindicated by heavy industry’s role in causing it.
• Two, it acknowledges the inevitable path of progress and works with consumer’s cravings, rather than against them.

While they can be easily dismissed as “greenwashing,” glossy covers do more good than we give them credit for. They contribute to popular awareness of the issues and suggest realistic small solutions that your average Zhou have a chance at. These possibilities are well worth the trees they are printed on.

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For more information about luxury consumption in China, browse these links:

• China Luxury Summit: “An annual gathering of luxury executives for the hottest issues concerning China’s luxury market.”
• WorldWatch: “Luxury Spending: China’s Affluent Entering ‘Enjoy Now’ Phase of Consumption”
• Amazon.com: “Elite China: Luxury Consumer Behaviour in China,” by Pierre Xiao Lu
• TNS Consumer Survey: “Luxury Brands in China” video
• McKinsey Quarterly: “The new Chinese consumer” and “The value of China’s emerging middle class”

By Mark Hiew, contributing blogger

Hello ResponsibleChina readers!

Greetings from Chengdu, the famously laid-back capital of Sichuan province, here in Southwestern China. Given that a lot of the existing blogging on China comes from the economic powerhouse centers along the East Coast, I plan on bringing some alternative voices of people working on sustainability issues here in the Southwest to ResponsibleChina. To begin with, however, I thought some background information on this part of the country might be useful.

Sichuan province, still largely unknown to most outsiders, is a large basin which sits in China’s southwest, and is known as the “rice bowl” of China. It’s home to more than 87 million people and claims a long history dating back to the Shang Dynasty of 1600 BC. Outside of its majority Han population, it contains a significant number of ethnic minorities, including Hakka, Hui, Tibetan, Qiang, Uighur and Yi groups. Culturally, Sichuan is famous for its spicy, tongue-numbing cuisine, the beauty of its women and perhaps most prominently, local economic reformer Deng Xiaoping.

From an environmental standpoint, Sichuan receives significant coverage due to the famed plight of its most popular inhabitant, the Giant Panda, whose native habitat is located in the province’s lush forests. A flagship panda breeding and research center is located just north of Chengdu. Another important environmental site is the ancient Dujiangyan Irrigation System, built in 250 BC (before the invention of explosives) and still in successful operation today. Not far east of Sichuan is Chongqing Municipality, home to arguably the largest city in the world (Chongqing officials include surrounding areas within the city’s defined limits) and the controversial Three Gorges Dam project.

China is surely one of the most exciting countries to be living in at the start of the 21st century. Hope, new prosperity and change emanates from every city block and Olympics billboard. Within China, as companies increasingly look westward, into the country’s interior with its lower production costs, Sichuan started to boom more recently than the South and East. Chengdu alone in 2006 had a GDP of 275 billion RMB–maintaining double digit growth rate over the last decade, according to Chengdu Invest. It’s readily apparent on the streets, where the newly moneyed and well-heeled fill restaurants and bars each night in a city whose citizens are famous for knowing how to enjoy themselves.

It’s also readily apparent in the amount of waste being generated. Figures dating back to 2003 list Sichuan as producing about 9 million tons of waste, a figure that increases 5 to 8 percent each year (see: “A Fantastic Presentation of Consumption” by Tan Juan in Issue No. 6 of  Chengdoo Magazine.) Groups such as the Jane Goodall Institute’s Roots and Shoots program already exist in the area, but clearly, there is a serious need for local waste-reduction action. Chengdu locals can draw much hope from the successful clean-up project for the city’s Funan river, which today is in far better condition than a decade ago.

Now, more than ever, it’s critical that sustainability and corporate social responsibility issues be addressed in partnership, rather than opposition, with the tremendous growth occurring throughout the region and country.

I hope to take part in that process.

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Read more about blogger Mark Hiew here.

(Photo courtesy of Mark Hiew via itslateagain on Flickr)

(Photo via WorldRevolution.org)

Chinese officials are attempting to relieve themselves of responsibility for greenhouse gas emissions, blaming developed countries, such as the United States, for global warming, instead.

Developing countries (i.e. India and China) must focus on reducing poverty as their primary objective, according to Chinese state official Zhang Yesui.

Guess you can’t really argue with that - who can tell China to ignore poverty?

But to reject the idea that China contributes to climate change, and to demand a grace period to raise greenhouse gas emissions, well, that’s just irresponsible.

BEIJING (AP) — A Chinese official gave the clearest sign yet that Beijing will reject binding caps on greenhouse gas emissions at a global meeting next month, saying Friday developing countries must be allowed to raise emissions to fight poverty.

“Climate change is caused mainly by developed countries,” Vice Foreign Minister Zhang Yesui said. “They should have the main responsibility for climate change and to reduce emissions.”

Beijing is about to overtake the United States as the world’s top greenhouse-gas producer. It is under pressure from Washington to accept binding limits at a meeting in Indonesia of environment ministers from 80 nations to discuss a possible replacement to the 1997 Kyoto Protocol on emission reductions.

“Most developing countries are in the process of industrialization and urbanization, and they face the arduous task of poverty reduction,” Zhang said. “So they need a large period of time for continuous energy demand growth with the growth of greenhouse gas emissions.”

Read the items below to get a sense of China’s role in climate change:

Just came across this July 2007 article today, and I think it’s worth a look-over…

TIME magazine’s Simon Elegant writes about China’s self-obsessed and materialistic “Me generation,” the under-30-year-olds who are more concerned about money and status than democracy and equality.

(Photo for TIME by Ian Teh)

“China’s Me Generation“
By Simon Elegant
TIME magazine
July 26, 2007

There are roughly 300 million adults in China under age 30, a demographic cohort that serves as a bridge between the closed, xenophobic China of the Mao years and the globalized economic powerhouse that it is becoming. Young Chinese are the drivers and chief beneficiaries of the country’s current boom: according to a recent survey by Credit Suisse First Boston, the incomes of 20- to 29-year-olds grew 34% in the past three years, by far the biggest of any age group. And because of their self-interested, apolitical pragmatism, they could turn out to be the salvation of the ruling Communist Party — so long as it keeps delivering the economic goods. Survey young, urban Chinese today, and you will find them drinking Starbucks, wearing Nikes and blogging obsessively. But you will detect little interest in demanding voting rights, let alone overthrowing the country’s communist rulers. “On their wish list,” says Hong Huang, a publisher of several lifestyle magazines, “a Nintendo Wii comes way ahead of democracy.”

What are the implications for the future of Chinese society?

Elegant says there are several long-term consequences that could arise from the current habits and attitudes of China’s young, affluent, middle class professionals:

1. Democracy may never come.

As the chief beneficiaries of China’s economic success, young professionals have more and more tied up in preserving the status quo. The last thing they want is a populist politician winning over the country’s hundreds of millions of have-nots on a rural-reform, stick-it-to-the-cities agenda.

2. Pollution will worsen.

In Beijing, for example, newly prosperous residents are snapping up automobiles at a rate of 1,000 a day. The number of vehicles on the capital’s sclerotic roads has doubled in the past five years, to 3 million. (By comparison, there are about 2 million vehicles registered in all of New York City.) But despite a grim pollution problem (Beijing air quality is among the world’s worst) that could embarrass China during next summer’s Olympic Games, the central government has made no move to curb vehicle purchases through regulation or taxes. And that, in turn, has made it harder for governments in the developed world to make progress in getting Beijing to do more to fight climate change.

3. People will fight.

Senior cadres…have acknowledged in public that growing unrest in the provinces, as farmers clash with police over expropriated land or official corruption, could threaten the party’s grip on power.

4. The rural poor will be left behind.

In March the government pledged to address problems plaguing the country’s peasants, such as access to medical treatment and schooling, health insurance and the disparity between urban and rural incomes. And yet a relatively small portion of the budget was set aside to address the concerns of the peasantry, with the bulk of spending still concentrated on stoking the booming economy.

It’s important to remember that the issue here isn’t whether or not the “Me generation” cares. It’s what they care about. You can’t blame them for preserving the comforts of life and aspiring for a profitable, successful future.

The test for China — as the Me generation grows bigger, richer and more powerful — will be whether it begins to push for the social and political reforms that are necessary to ensure China’s long-term prosperity and stability. How likely is that? Though they’re not exactly clamoring for free elections, members of the new middle class have shown a willingness to stand up to authority when their interests are threatened.

And what are their interests?

Owning private property. Affording a luxurious lifestyle. Traveling the world. Playing with their dogs (”Last October police in Beijing attempted to enforce rules limiting each household to a single, registered animal no taller than 14 in. (35 cm). The drive sparked a rare public demonstration by hundreds of well-heeled Chinese, mostly young dog owners.”) Partying at clubs. Looking good. Being respected by their international colleagues.

Read the outcome of this China Youth Daily survey of opinions about climate change and the environment, published by China Dialogue:

The public wants the government to set examples of sustainable consumption and feels that businesses have some responsibility to act as role models. There would, however, be strong resistance if people were asked to sacrifice their current living standards for the sake of sustainable consumption. Many people see the pursuit of a comfortable lifestyle as an individual right.

The rest of the survey reveals a gap between what people know (i.e. air pollution from car exhaust is horrendous) and how they react (i.e. everyone still wants to buy a car.)

For example:

There is a high level of awareness of climate change among young people: the survey showed that almost eight out of 10 understood the issue and were concerned about it….

A minority (18%) recognised that climate change was taking place, but were unconcerned. One view that was expressed was that although climate change may be occurring, it will not greatly affect our generation. Another was that climate change may not necessarily be a bad thing….

….there are also many blind spots in the public’s environmental knowledge. For example, the benefits of energy-saving light bulbs are not widely recognised; many people are not aware of how much water they consume; and there is not wide enough recognition of the importance of choosing locally-produced goods.

When young people make plans for their future and seek to improve their quality of life, they often do not take into account the environmental effects of the choices they make. For example, there seems to be a strong desire to own a car, with the vast majority of people wanting to buy one if they can. There is also a widespread and strong desire to own one’s own home and carry out home improvements.

The goal of China’s government officials and educators should be to inform China’s youth of the disastrous effects of over-consumption. Until they realize how pollution and corruption affect their day-to-day lives, Chinese youth won’t have any incentive to change their habits.

Mara Hvistendahl from WorldChanging comments on the impending shifts of power in China as the National Party Congress convenes in Beijing this week.

“National government gets most of the attention outside China, inside the country policy enforcement is mostly the responsibility of local governments,” she says. “When the central government unveils a forward-thinking policy (and it sometimes does), it has to battle these local authorities, who are typically more concerned with growth than with environmental protection.”

She offers three examples of how individuals and local, municipal authorities can make a difference in fighting China’s pollution. Read about them here.

• Rethinking Change in China
  WorldChanging
  By Mara Hvistendahl
  October 15, 2007

What lessons can we take away from these cases? Sending a few hundred dollars to Qinghai has more impact on environmental and rural development than installing a representative in Beijing. And in fighting pollution, publicity is crucial. As local governments court outside investment, they don’t want to be branded as polluted. Wu Lihong made his case by tipping off the government-owned Central China Television (CCTV) and other national outlets, but international exposure is, in most cases, worse. (It will be interesting to see whether The New York Times piece has any further effect on Wuxi. Hopefully it will help Wu.)

More broadly, such examples show that China is not monolithic — that small-scale efforts can make a difference. Relationships with the authorities are still important. But the old social change mantra might be revised for China: think nationally, act locally.

The inflation rate in China this year rose higher than expected to 4.2 percent, the highest its been since 1996, mainly because of rising food prices, according to the Asian Development Bank.

One reason for the spike was the outbreak of blue ear pig disease that caused pork shortages, thus driving up the prices of pork. The virus wiped out pig communities in China and spread to swine in Vietnam and Burma, according to the Washington Post.

Though there’s no evidence that the virus poses a threat to humans, there are signs that diseased pigs already have entered the food supply either directly because farmers may be trying to pass off diseased pigs as healthy ones, or indirectly because they have been thrown into water used for fishing or for drinking.

The Chinese government says that it has brought the problem under control, but some experts are skeptical, remembering the secrecy and censorship surrounding the bird flu and SARS epidemics a few years ago.

While China’s central government has made numerous improvements since then in how it deals with infectious disease control and informs the public, it has once again been slow to share scientific data and tissue samples with other countries.

As a result, there is worry that while China is lagging, the virus is quickly turning into a global problem.

While China’s previous reluctance to share information may have been the legacy of years of secrecy, its reasons for withholding information this time may be about something else: business interests.

But neglecting your environment–i.e. not taking care of your sick pigs–comes with a cost that outweighs profits or other “business interests.” Inflation, which affects everyone in a consumer society, is one of the main effects.

Now China will have to work extra hard to get everything back to target.

The aim is to rein back the growing trade surplus and at the same time ease strains on the environment by reducing goods production that requires high inputs of energy and natural resources, and that causes high levels of pollution, said Zhuang Jian, senior economist of ADB’s China Resident Mission.

In addition, the key challenge for China is to reduce the country’s reliance on exports and investment for growth in favor of private consumption.

“Such a switch could lessen vulnerability to external shocks and ease environmental strains caused by the emphasis on export and investment-led heavy industry,” said Zhuang. (For full story from China View, click here.)

In other news, China’s leading meat and food processing company, Zhongpin, was honored with the 2007 “China Top Brand” award for its pork products, according to the PR Newswire on CNN Money. Let’s hope the company doesn’t get hit with a food scandal any time soon.

The “China Top Brand” award represents the “blue ribbon” approval granted by General Administration of Quality Supervision, Inspection and Quarantine of the People’s Republic of China (AQSIQ) on behalf of Chinese Central Government. The selection criteria for the award include categories such as quality, market share, development capability and social responsibility.

As someone who won a scholarship from the Overseas Press Club, I have always admired foreign correspondents, especially those who are not only talented writers, but who are also sensitive enough to pinpoint the nuances of a complicated story and smart enough to draw out the bigger picture.

Evan Osnos, the Chicago Tribune’s Beijing bureau chief, who began reporting on China in 2005, has demonstrated talent, sensitivity and intelligence with his reporting. His three-part series, “China’s Great Grab,” about how China’s hunger for natural resources affects the rest of the world, won him the prestigious $10,000 “Oz Prize” from the Asia Society.

Image via the Asia Society

Osnos made the front page again today with his special report on migrant workers. The article, “An odyssey into the heart of China,” is a snapshot of life among laborers who move from their rural homes to the crowded basements of boarding houses in urban Chongqing, looking for higher wages, but the story of individuals illustrates a more significant trend, a “revolutionary global shift,” according to the headline:

The march to China’s cities is part of a global sea change. Sometime next year, the UN predicts, the planet will pass a major milestone, when the world’s population becomes more urban than rural for the first time in the history of the species.

Leading that change are China’s 1.3 billion people, whose village exodus has the potential to alter the nation as dramatically as its free-market revolution. And the impact on the rest of the world spans everything from how fast diseases spread to the price of seafood.

Keeping in line with the main subject matter of this blog, I’d like to highlight an excerpt from the article that describes the impact of urbanization on the environment:

The rising standard of living comes at an unmistakable price.

“This is called Clear Water Stream,” said local environmentalist Wu Dengming, standing on a bridge over a murky, sluggish gully in northwest Chongqing.

Indeed, this model city is buckling under its own waste. Water-treatment plants are overwhelmed, sending tens of thousands of tons of raw sludge into rivers every day. Chongqing is sunless most days, blanketed in smog that stands out even by modern China’s standards.

A new network of pipes is designed to upgrade treatment capacity by year’s end, Wu said, which should restore places like Clear Water Stream. Chongqing also has introduced natural-gas taxis and buses, along with stricter energy-efficient building codes. But global environment experts are paying particular attention to the Chinese heartland as a measure of how breakneck urbanization will affect the country and beyond.

“As the Chinese countryside goes, so goes the planet,” said Rob Watson, chief executive of the design firm American Sino-Tech, who has advised Chongqing authorities on energy efficiency. “When you move a Chinese peasant into an urban area, they end up consuming three times the resources as when they were in the village. And as wealth increases, as people get plasma screens and everything else, the ratio will get larger.”

Osnos explains the other types of impact this rural-to-urban shift has on China and the rest of the world:

• The draw of cities is a uniting force. “It is as close as today’s Chinese citizens come to a national religion.”
• Cities are status symbols. Those hundreds of millions of rural Chinese who move to urban areas “are united less by their income levels than by a daily unending quest for something better: a nicer car, a bigger meal, a finer education, a higher status.” And city wages prove that this new kind of wealth that is achievable: “City residents in Chongqing can expect to earn an average of $1,470 a year, nearly four times the amount in nearby rural areas.”
• The migration is also divisive. “The country is more porsperous than at any time in history, but the gap between haves and have-nots has surpassed the U.S. and is approaching the yawning divides associated with Latin America….And as urbanization increases, those left behind fall even further behind.”
• Migrant workers symbolize a new freedom. “For all its overwhelming bleakness, the migrants’ world also reflects an essential improvement in Chinese life: 30 years of reforms have unmoored Chinese farmers from their villages to to a greater degree than ever before.”

Some things about the article that made me feel a little uneasy were the repeated references comparing present-day China to 19th century Chicago. I understand that the Trib wanted to find a local “hook” into the story, but saying China’s migrant workers are “the 21st century heirs to America’s meatpacking migrants” discredits the country’s advancement, perpetually keeping it “behind” America (or “the West”) in the grand timeline of global civilization. Plus, the allusions to the “heart of China” made me think of Joseph Conrad’s “heart of darkness,” as though China is this deep, dark, scary void that hasn’t yet been penetrated by the light of democracy or capitalism. To be fair, Osnos does end the story by showing one of the day laborers emerging from his basement boarding room, “out into the light”…but only after saying that men like him “slipped through the cracks in China’s history” and that “their world is defined, above all, by deprivation.”

Click here for a collection of Osnos’ Tribune stories.

The New York Times presents “a series of articles and multimedia examining the human toll, global impact and political challenge of China’s epic pollution crisis.”

• As China Roars, Pollution Reaches Deadly Extremes
  By Joseph Kahn and Jim Yardley
  August 26, 2007

Summary: China is either unwilling or unable to make changes to improve the environment. As a result, public health is suffering, the economy is burning up, and citizens are getting anxious. While the government tries to impose some regulations, no one is really taking full responsibility for the country’s unprecedented pollution problem.

No country in history has emerged as a major industrial power without creating a legacy of environmental damage that can take decades and big dollops of public wealth to undo.

But just as the speed and scale of China’s rise as an economic power have no clear parallel in history, so its pollution problem has shattered all precedents. Environmental degradation is now so severe, with such stark domestic and international repercussions, that pollution poses not only a major long-term burden on the Chinese public but also an acute political challenge to the ruling Communist Party. And it is not clear that China can rein in its own economic juggernaut.

Other multimedia features:

• Expert Roundtable
  

  Throughout the week, a panel of scholars and environmentalists will take turns answering your questions on the political, social, scientific and economic challenges posed by the country’s rapid industrialization and equally sudden pollution crisis.

• Audio slide show: The World’s Smokestack
  

  Chang W. Lee, a Times photographer, traveled around China to document the impact of industrialization on the country’s rural and urban landscapes.

• Video: The Real Cost
  

  What is China’s real gross domestic product when the cost of pollution is subtracted? Recently the Chinese government tried to calculate a national “Green G.D.P.” and the new formula showed the soaring economy in a more sober light.

• Interactive graphic: Mapping the Impact
  

  See where pollution has most affected China’s landscape and how the country’s environment and economy compare with the rest of the world.

[tags]New York Times, China, pollution, news[/tags]

The income gap in China made big news last week, as the Asian Development Bank released a report stating that inequality has risen in Asia’s developing countries over the past 10 years. Policy makers must take this inequality seriously, the ADB said, because of the following reasons:

Inequality is multi-dimensional
The income gap is not the only characteristic of inequality. “In the PRC, for example, differences in health outcomes have increased between rural and urban areas.”

The impact on the evolution of economic well-being
Growing inequality means slower poverty reduction. In other words, it’s becoming harder for poor people to get rich, not because of the gap in outcomes (health status, income, education) but because of the lack of opportunities available to the disadvantaged in the first place.

Stifling growth
Inequality can dampen growth prospects by creating social divisions and leading to the development of low-quality institutions and policies, which–lo and behold–feeds the cycle of slow growth.

China ranks as one of the top two countries, along with Nepal, with the highest Gini coefficient, a measure of inequality in income and expenditure distributions. In 1993, China’s Gini coefficient was 40.74, and it rose to 47.25 by 2004. Cambodia, Bangladesh and Sri Lanka also saw rapid increases in inequality over the same time period.

But before you freak out, consider a report about the “value of China’s emerging middle class,” published in The McKinsey Quarterly last year.

McKinsey says China “will avoid the ‘barbell economy’ [large numbers of poor, a small group of the very wealthy, and only a few in the middle] that plagues much of the developing world, as incomes across all urban segments increase and a huge middle class begins to emerge. Companies should adjust their strategies to capture the wave of consumer spending that will be unleashed.”

According to the research conducted by the McKinsey Global Institute, “The rising economy in China will lift hundreds of millions of households out of poverty. Today 77 percent of urban Chinese households live on less than 25,000 renminbi a year; we estimate that by 2025 that figure will drop to 10 percent.”

McKinsey’s projection of a growing middle class means that “even as the absolute difference between the richest and poorest continues to widen, incomes will increase across all urban segments.”

Of course, this will come true only if companies begin targeting the middle class consumer now, by lowering product costs, creating low-end product segments, and sourcing from domestic suppliers, McKinsey recommends.

However, if businesses do not take advantage of this opportunity to promote the growth of the middle class, then I guess the gap will remain…and continue to widen.

Related links:

• Report: Asia’s Rich-Poor Gap Growing (Associated Press via Forbes)
• Asian Development Bank: Asia’s rich-poor gap growing (International Herald Tribune)
• Key Indicators 2007: Inequality in Asia (Asian Development Bank)
• The value of China’s emerging middle class (McKinsey Quarterly)

[tags]Asian Development Bank, China, income equality, income gap, inequality, McKinsey[/tags]