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By Sun Liping
According to the National Bureau of Statistics, the total wage packet earned last year stood at 1,474.4 billion yuan (US$181.8 billion). Overall, the telecommunications business was worth 922.5 billion yuan (US$113.7 billion) and property sales were 1,037.6 billion yuan (US$127.9 billion).
Telecoms business volume was about two-thirds of the country's total salary. The comparison is shocking, even though a substantial portion of spending was accounted for by government money. Housing sales were also disproportionately high.
Citizens are becoming increasingly concerned about the relationship between expenditure and living standards, feeling that exclusively concentrating on income is not enough. In reality, it does not necessarily follow that improvement in living conditions is proportionate to increase in expenditure.
An article posted on the Internet entitled "The going gets tough in Shanghai on 5,000-yuan (US$617) monthly pay" is instructive.
A white-collar employee of a foreign-funded firm in Shanghai, paid 5,000 yuan a month a handsome sum by Chinese standards has found making ends meet in the city is very difficult.
His monthly expenditure is as follows: 1,000 yuan (US$123) on home rent, 300 yuan (US$37) on commuting, 200 yuan (US$25) on food, 800 yuan (US$99) on video and audio products and clothes, 800 yuan on dates with girlfriend, 1,000 yuan on outings with friends, 200 yuan on his mobile phone, landline and Internet, and 300 yuan on electricity and gas. In addition he sends 600 yuan (US$74) to his parents each month as part of his filial duties. This leaves just 600 yuan.
How long would it take to come up with the 168,000-yuan (US$20,715) down payment for a 80-square-metre apartment? More than nine years.
To make matters worse, this young professional faces hikes in water, electricity and coal prices. Statistics show the prices of fuels and raw materials rose by 11.4 per cent on average in 2004; housing rose by 4.9 per cent and the prices of water, electricity, coal and natural gas increased by an average 10.5 per cent. This was triggered by ever-increasing investment.
We cannot help but ask: Where is the wealth created by the prosperous Chinese economy? Where has the money made on housing and fuel price hikes ended up?
Price, while being the medium for commodity exchange, can be a means of robbing others of their wealth in addition to being an instrument of transferring wealth.
When an economic entity imposes an unreasonably high price on an essential commodity and you hand over your salary, with its amount suppressed, it becomes clear how the plundering is carried out.
Many seem to have woken up to this stark reality. Some point out that revolving around the real estate boom of recent years is a wealth-plundering orgy. Property developers laugh heartily, wallowing in the glow of their swollen bank accounts. In sharp contrast, millions of everyday people laugh wryly, if they are in the mood to force a smile at all, seeing their money gulped down by the rising property prices monster.
Amidst the recent rounds of petrol price rises, some researchers said the maddening oil price hikes are the most naked expression of economic plundering.
Data shows oil companies are reaping fabulous profits.
A careful study of the prices of Chinese commodities yields interesting results. Commodities can be roughly divided into three categories.
First come those that are higher than on the world market. For example, one is charged only 1.5 US cents per minute for a long-distance call from the United States to China, which is 90 US cents per hour. But one is charged 8 yuan per hour (99 US cents) the other way round, excluding the fee for dialling through 17911 3 yuan (36 US cents) per hour and local-dialling fees.
The second type of prices is that which is on a par with the international market, such as house prices. Houses in China are built by workers that are paid unbelievably humbly, compared to their peers in developed countries. In addition, building materials are very cheap and the price of land has been kept low by administrative means.
The third category of prices is clearly those that are lower than on the world market the prices of labour-intensive products such as garments, shoes and bags.
How do these three categories of prices form? From a purely economic point of view, it could not be simpler it is the relationship between supply and demand. It follows that China's labour force would be more expensive if there were a shortage of workers. It also follows that telecoms fees would not be so high if there were more players in the arena.
But the problem is: What determines the supply-demand relationship? Can it be purely market forces? The answer is: There is more to it.
Telecoms firms are a good example of monopoly. They all stem from government agencies overseeing the telecoms sector. Notoriously poor management and low efficiency has not prevented them from reaping huge profits through monopolizing prices.
Monopoly in the property market is rather different, though some administrative factors exist. It is the presence of oligarch figures that has helped bring about this monopoly. This is a new type of monopoly for China, and one we are likely to run into in the future.
Note: the author is a professor from the Sociology Department of Tsinghua University
(China Daily December 16, 2005)
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