Problem Solution Essay Final

Globalisation is defined as the increase in trades and services around the world which allows the country to gain profits (WHO, n.d.). China is one such country that makes use of the advantages from globalisation to promote their market in increasing their gross domestic product (GDP). Although globalisation has aided China in overcoming the economic downturn, it has also created several forms of inequalities. Zhang and Kevin (2010) has also stated that globalisation has contributed in income and regional inequality. The most common form of inequality would be the income inequality. This essay will discuss 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.

Globalisation which has widen the income gap therefore causing income inequality. The salary of the workers in the rural areas is lower due to lack of skill while the ones in urban area were higher because of their higher skillset thus it shows the presence of bias that leads to income disparity. Li Shi (n.d.) stated that the policies implemented by China tends to be more biased towards the urban areas which caused the income inequality between the urban and rural. Therefore, leads to unequal education system between 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.

The existing measure in China to tackle the income inequality 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. China was able to have a faster income growth because the rich was given preferential treatment so they will not resent the government while the poor was neglected due to their incompetence (Cevik and Correa cited from Talley (2015)). 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. The Government need to attempt to increase the skills of this population to better bridge the income disparity gap.

Education is a good way to improve skills of the people because both urban and rural areas could develop more skilful people therefore bridging the income disparity gap. However 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 became a form of 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 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 problem due to greed and will attempt to corrupt its economy for their own benefits.

Gupta et al. (1998) states that income distribution will be affected by corruption. China under the leadership of President Xi Jinping has been tackling the problem persistently (Ting Shi, 2016). 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 adopted zero tolerance approach to corruption. Consequently reducing the income disparity that was brought on by the corruption.

Nonetheless, the solution of balancing the taxes payable for the higher and lower income people, it could help improve the regional income inequality however it may not be accepted by everyone. Increasing the skillsets of people could also help balance the inequality however the affordability is still a problem. However with these solutions, corruption could still continue to worsen the inequality if the Government does not tighten their state.

Word Count (excluding cover, references and other texts): 780

References

Gan, L. D. (2013, August). Income Inequality and Consumption, 1-20. Retrieved from http://international.uiowa.edu/files/international.uiowa.edu/files/file_uploads/incomeinequalityinchina.pdf

Gupta, S., Davoodi, H., & Alonso-Terme, R. (1998). Does Corruption Affect Income Inequality and Poverty? Fiscal Affairs Department. Retrieved from https://www.imf.org/external/pubs/ft/wp/wp9876.pdf

Li, S. (n.d.). Changes in income inequality in China in the last three decades. Institute of Income Distribution, Beijing. Retrieved from http://uschinacenter.as.nyu.edu/docs/IO/32612/Li_shi_paper.pdf

Ning, G. J. (2010). Can Educational Expansion Improve Income Inequality in China? Evidences from the CHNS. Nankai University and IZA. Retrieved from http://ftp.iza.org/dp5148.pdf

Qian, N., & Wen, J. (2015). The Impact of Xi Jinping’s Anti-Corruption Campaign on Luxury Imports in China. Retrieved from http://aida.wss.yale.edu/~nq3/NANCYS_Yale_Website/resources/papers/QianWen_20150403.pdf

REUTERS. (2014, Febuary 23). China's premier unveils more measures to tackle corruption. (M. Perry, Ed.) Business Insider. Retrieved from http://www.businessinsider.com/r-chinas-premier-unveils-more-measures-to-tackle-corruption-2014-23?IR=T&r=US&IR=T

Shi, T. (2016). Xi Calls for a China in 2016 Where `Nobody Dares to Be Corrupt'. Retrieved from http://www.bloomberg.com/news/articles/2016-01-13/xi-calls-for-a-china-in-2016-where-nobody-dares-to-be-corrupt-

Talley, I. (2015). China Is One of the Most Unequal Countries in the World, IMF Paper Says. The Wall Street Journal. Retrieved from http://blogs.wsj.com/economics/2015/03/26/china-is-one-of-most-unequal-countries-in-the-world-imf-paper-says/

World Health Organization. (n.d.). Trade, foreign policy, diplomacy and health. Retrieved from WHO: http://www.who.int/trade/glossary/story043/en/

Xiaobo, Z., & Kevin H., Z. (2003). How Does Globalisation Affect Regional Inequality within A Developing Country? Evidence from China. The Journal of Development Studies, 39:4, 47-67. doi:10.1080/713869425

Xue, J. J., Luo, C. L., & Li, S. (2014, Febuary 11). GLOBALIZATION, LIBERALIZATION AND INCOME INEQUALITY: THE CASE IN CHINA. The Singapore Economic Review, 59(1), 1-21. doi:10.1142/S0217590814500027