Huge Chinese mattress hides $US1.4 trillion…

There is no political, social, educational or philosophical quick-fix for human nature. Figures showing the growing gap between the rich and poor in so-called communist China highlight this once again.

Despite decades of communist indoctrination and more recently, greater freedoms and openness to world markets, the Chinese people still like to keep money under their mattress so they can spend it on ‘things’.

And like anything in China, or India for that matter, that’s one big mattress.

A study conducted for Credit Suisse Group shows that China’s households hide as much as 9.3 trillion yuan ($US1.4 trillion) of income not reported in official figures – 80 per cent of it by the nation’s wealthiest.

One reason economists believe this figure is because the strongest area of economic demand in China right now is the domestic purchase of consumer items from designer handbags to flat screen televisions.

Taking the mattress cash figure into account, it turns out the average urban disposable household income is 32,154 yuan, or 90 per cent more than official figures. The bad news is that this means China’s rich-poor gap is most likely much bigger than realised.

The Gini coefficient is a single statistic used by economists to summarise the distribution of income across the population.

China’s Gini coefficient was already considered to be too high – before the hidden money is taken into account. In May, the Economic Information Daily, a government-affiliated newspaper, said the figure reached 0.47, higher than the recognised ‘warning level’ of 0.4.

By comparison, capitalist Australia’s Gini coefficient is .307, a fair bit below China but still a level where the wealthiest 20 per cent of households account for 61 per cent of total household net worth, at an average of $1.7 million; and the poorest 20 per cent of households account for 1 per cent of total household net worth, at an average of $27,000.

And the lessons in all of this:

  • years of communist ideology has made no impact on human greed;
  • about a billion poorer Chinese may get very cranky sometime soon;
  • we are dreaming if we continue to live blindly in our little Oz eco-bubble;
  • worldly systems are all dust – you need a spiritual answer for a spiritual problem ;
  • I don’t care if you are voting Green, Labor, Liberal or donkey, none of them can save the world;
  • I remember meeting Someone who said He was dying to save the world…

Sources: ABS report 6523.0 – Household Income and Income Distribution ; Beware a trillion dollars lying beneath Chinese mattresses

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