Growth with a bitter aftertaste

China's enormous economic growth has lifted millions out of poverty and raised citizens' standard of living. The other side of the picture is growing income inequality.

cityscape, Kowloon Island

Kowloon Island, Hong Kong. Photo: ©

- Market-oriented reforms and the privatization of government activities have been among the most important measures in the Chinese government's strategy to reduce poverty and regional inequality among its citizens. My findings show that privatization leads to lower incomes and greater differences in western China, phenomena which contradict key economic theory, says Nan Zou Bakkeli, who has recently completed her doctorate in sociology at the University of Oslo

Differences leading the wrong way

Bakkeli has studied how income inequality is linked to privatization, health and wellbeing in China using data from two large studies.

She believes that increasing differences between town and country, between different sectors of the labour market and between well- and lesser educated workers can explain the decline in average income in China and the increase in inequality. Greater income inequality has led to older Chinese becoming less satisfied with life.

Privatization, Chinese style

Nan Zou Bakkeli
Nan Zou Bakkeli

- Growth in China has made some people very rich. In 2016, about half of the world’s luxury goods were bought by Chinese, but this represents only a small minority of the population, Bakkeli explains.

Increased privatization also means that services that were free now cost money.

- Which job you have and what sector you work in now have a greater impact on the healthcare you have access to.

Chinese privatization has negatively affected healthcare. Previously, almost the entire population practically had free access to basic healthcare. But now, hospitals have to make do without finance from the state and therefore are responsible for raising their own income.

- Healthcare has become so expensive that many Chinese are waiting too long before going to the doctor. Meanwhile, the hospitals have realized that they can profit from the sale of medicine, and so medicines have also become very expensive. The overuse of medicines and unnecessary medical treatments are also now a problem. And health services are now eager for Chinese women to give birth by Caesarean section. Between 40 and 50 percent of Chinese women give birth by Caesarean, says Bakkeli.

Without a safety net

As mentioned above privatization has also led to increasing differences between town and country. During the 1980s, the large collectives in the countryside disappeared. Here people had previously lived and worked together across generations and been responsible for each other's welfare and old age.

- A large number of elderly people lost both economic and social security because their welfare was linked to their collective. Meanwhile, increasingly more people move from the countryside to the cities, and the young people who have traditionally taken care of the elderly population are disappearing. However, many of today's rights are related to birthplace, and this creates major problems for those who move to the cities, says Bakkeli.

Healthcare services meeting challenges

- What I have found in my work is that the focus on privatization has clear limitations and results in greater inequality in China. Going forward it will be important to discuss how the Chinese healthcare system can adapt to greater differences in population and demographic changes. But also how healthcare can solve new challenges related to environmental and lifestyle diseases, Bakkeli says.


The Price of Inequality: Privatisation, Health and Wellbeing in China

  • The study examines how income inequality is linked to privatization, health and wellbeing (subjective wellbeing) in China.
  • The study is based on data from two comprehensive surveys - one Fafo survey and an American-Chinese survey.
  • The FAFO survey was conducted among 167,000 Chinese people and has a response rate of 96 per cent.
  • The second study is an American-Chinese collaborative project in which questions of Chinese health and diet have been asked regularly since 1989.
By Øyunn Syrstad Høydal
Published Nov. 2, 2016 3:36 PM - Last modified Aug. 1, 2019 4:01 PM