Problem Solution Essay Draft 1

Globalisation is defined as the increase in trades and services around the world which allows the country to gain profits. China is one such country that makes use of the advantages from globalisation to promote their market in increasing their gross domestic product (GDP). However, with globalisation, China has been presented a problem - inequality. Although globalisation has aided China in overcoming the economic downturn, it has also created several forms of inequalities. The most common form of inequality would be the income inequality of which will be the main focus point in this paper. This essay will discuss on the how globalisation leads to income inequality, the impacts on China, and the existing measures taken together with proposed solutions to tackle the growing income gap. This has been a growing issue in China, though hard to eradicate, requires a sustainable amount of measures to reduce the impact of inequality.

China being one of the fastest growing economy for three decades, tolerated a side-effect from globalisation which has widen the gap of income distribution therefore causing income inequality. The salary of the lower-skilled workers decreases while higher-skilled workers increased, thus shows the presence of biasness that leads to income disparity. Li Shi (N.D.) discussed that the policies implemented by China tends to be more biased towards the urban areas which caused the income disparity between the urban and rural. Income disparity also leads to unequal education system between the urban and rural areas. Residents from rural areas were more inclined to have lesser skills and education as compared to the urban residents. This can be support from Li Gan (2013), who states that lower-income households are likely to have lower education levels. The education gap among rural areas leads to consequential income disparity. Furthermore, the situation has worsened when corruption was found amongst bureaucrats, and the area impacted. Xue Jinjun et al. (2014) noted that corruption has a strong impact on the equality and integrity of China’s income distribution.

The existing measure in China to tackle the income disparity among urban and rural areas is the taxation payable by its people. In this case, China’s income growth was able to stay at the top because of its focus on the higher growth rates. Evidence from Talley (2015), who quoted from two economists, Cevik and Correa stated that China was able to have a faster income growth because they were targeting more among the rich and neglecting the poor. Therefore, raising the taxes on the rich could help narrow the income gap. However this should not be based on earning money but rather used to fund education, health care and other social services. Additionally, China could also lower the labour taxes from the low and middle income families. In addition to providing more for families with lower income, the Government should attempt to increase the skills of this population to better bridge the income disparity gap.

Education could also be a bridge to economic opportunity for the higher income residents but not for the lower income residents.  Although education could be a solution to these problems, it is difficult to sustain for a larger population. With consideration on how large the population is in China, it is difficult for most people to be able to afford higher education. Therefore, education should be perceived as an investment rather than a necessity. By having higher education attainment could lead to more opportunities of having a decent paying job. Hence, this would help to contribute to society and hence leading to a higher economy. However, the poor would not be able to afford education as easily as the rich. Therefore, funding from the government is another possible way to aid the poor. Additionally, increasing the amount of educated people would not only assist China in reducing the income gap but also raising the income growth. According to Ning (2010), encouraging more people to be educated would be beneficial in reducing inequality. However with more educated people could lead to corruption problems due to greed and will attempt to corrupt its economy for their own benefits.

The impact of corruption, as supported by Gupta et al. (1998), states that income distribution will be affected by corruption. This therefore leads to an increased disbelief in the Government. However China, under the leadership of President Xi Jinping has been tackling the problem persistently. The Government has adopted policies such as the anti-corruption measures that aided in educating their officials aiming to prevent corruption at its roots. However, the credibility of the Government was not strong as it is difficult for the Government to supervise the large amount of the probable corrupted officials (Qian & Wen, 2015). Hence, in order for the Government to give assurances to its people, they must have no tolerance to its corrupted officials as argued by Reuters (2014), stating that the Government has to adopt zero tolerance approach to corruption. 

In conclusion, Globalisation has its merit in helping China but also triggered the unnecessary inequalities. The issues are possible to mitigate but would not be completely eradicated. The disparity in income gap among the urban and rural areas could only be reduced, and education could only be given to as many people as possible and corruption would be an endless complication.

References:

·       Dr. Li Gan, 2013. “Income Inequality and Consumption in China”.
http://international.uiowa.edu/files/international.uiowa.edu/files/file_uploads/incomeinequalityinchina.pdf

·       Xue Jin Jun, Chu Liang Luo and Shi Li, 2014. “GLOBALIZATION, LIBERALIZATION AND INCOME INEQUALITY: THE CASE OF CHINA”.
http://www.worldscientific.com.libproxy1.nus.edu.sg/doi/pdf/10.1142/S0217590814500027

·       Li Shi, N.D. “Changes in income inequality in China in the last three decades”.
http://uschinacenter.as.nyu.edu/docs/IO/32612/Li_shi_paper.pdf

·       Ian Talley, IMF Paper, 2015. “China Is One of the Most Unequal Countries in the World”.
http://blogs.wsj.com/economics/2015/03/26/china-is-one-of-most-unequal-countries-in-the-world-imf-paper-says/

·       Guangjie Ning, 2010. “Can Educational Expansion Improve Income Inequality in China? Evidences from the CHNS 1997 and 2006 Data”.
http://ftp.iza.org/dp5148.pdf

·       Sanjeev Gupta, Hamid Davoodi & Rosa Alonso-Therme, 1998. “Does Corruption Affect Income Inequality and Poverty?”.
https://www.imf.org/external/pubs/ft/wp/wp9876.pdf

·       Nancy Qian & Jaya Wen, 2015. “The Impact of Xi Jinping’s Anti-Corruption Campaign on Luxury Imports in China”.
http://aida.wss.yale.edu/~nq3/NANCYS_Yale_Website/resources/papers/QianWen_20150403.pdf

·       Reuter, 2014. “China's premier unveils more measures to tackle corruption”.
http://www.businessinsider.com/r-chinas-premier-unveils-more-measures-to-tackle-corruption-2014-23?IR=T&r=US&IR=T