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The rare mention of 600 million Chinese people with only a 1,000 yuan (140 U.S. dollars) monthly disposable income in Premier Li Keqiang’s remarks late last month remains a hotspot topic across the country and a sobering reminder of the challenge for the country’s economy amid the covid-19 pandemic.

Noting that this figure has actually existed for a while, Chen Yuyu, professor with Peking University’s Guanghua School of Management, says Premier Li’s mention emphasized the importance of supporting vulnerable groups hit especially hard by the outbreak while the country focuses on propping up the economy.

WHO ARE THEY?

“It is worth stressing that the 1,000 yuan in Premier Li’s remarks actually refers to disposable monthly income rather than income in general,” says Chen, adding that related figures are included in China’s Statistical Yearbook 2019 and the Statistical Communiqué of the People's Republic of China on the 2019 National Economic and Social Development.

According to the communique,grouped by income quintile, the per capita disposable income of low-income group reached 7,380 yuan, the lower-middle-income group 15,777 yuan, the middle-income group 25,035 yuan, the upper-middle-income group 39,230 yuan and the high-income group 76,401 yuan.

The group of the per capita disposable monthly income of 1,000 yuan (12,000 yuan per year) covers all low-income people, whose disposable monthly income is only 615 yuan. Meanwhile, half of those In the lower-middle-income group also have a disposable monthly income below 1,000 yuan. “What the premier refers to is the 600 million Chinese people in the bottom 40 percent in the income ladder,” Chen says.

According to Chen, these people, mainly consisting of rural residents, migrant workers and a small proportion of low-income families in the cities, are concentrated in west and central China where job offers are fewer and salaries are lower. Most of the 260 million rural Chinese who haven’t migrated for city jobs, bar a very small number of people with big farming businesses,belong to the lowest fifth.

Figures show that China’s 290 million migrant workers have a per capita monthly income of 3,962 yuan, and a majority of them have to support the entire family. With four family members in average, their per capita disposable monthly income is also lower than 1,000 yuan. Chen estimates that more than 100 million migrant workers, or one third to half of the total, are in this situation,meaning that a total of 400 million people in rural families are living with less than 1,000 yuan to spare monthly. Add it to the 200 million low-income people in urban areas,and the total hit 600 million.

Region-wise, families in central and west China typically have only half of the disposable income as their eastern counterparts.

MORE NON-RURAL JOBS

“It’s vital to know who earn more in China,” Chen says. While Premier Li puts the number of China’s entire work force at 900 million people, figures show that the number of people with jobs was only 775 million as of last year. The gap is attributed to 100 million soldiers, college graduates and women with full-time jobs as well as 40 million people who have lost their jobs. China has currently 500 million-plus non-rural jobs and some temporary ones with lower pays.

“China must create more non-rural jobs in order to boost its economy and increase the income for those in the lower 40 percent,” Chen says, estimating that about 60 million to 80 million people will see their monthly disposable income surpass 1,000 yuan from below.

Last month, China’s central government has pledged to increase its fiscal budget deficit by one trillion yuan from last year and issue one trillion yuan of special central government bonds, the proceeds of which will be transferred to local governments.

“The Chinese government has made the right moves, but right now the issue is how to implement these policies well,” Chen says, voicing concerns about the inexperience and inadequate preparations in a post-outbreak situation.

Expecting a sharp increase in the annual 60 million jobless or impoverished people that need government care, Premier Li promised enough fund to support these people and vowed precise and detailed efforts to shore up people’s livelihoods.

© 2019 Guanghua School of Management Peking University