Tue, May 16, 2006 - Page 8 News List

China faces obstacles in reducing inequality

By Jackson Yeh 葉國豪

Since the 1990s, healthcare, education and housing have been the most difficult areas for China to reform. A popular joke goes, "Housing reforms mean unaffordable housing; educational reforms drive parents crazy; healthcare reforms shorten your life." The irony and frustration evident in such sayings demonstrate the gravity of these issues.

A few days ago, a father in Liaoning Province killed his sick daughter. This is not just an isolated tragedy, and the underlying cause deserves our attention.

Illness leading to poverty is one of the most difficult problems facing healthcare reform in China. Because incomes have not grown at the same rate as medical costs, neither people in rural areas nor those in Beijing, Shanghai, or other cities can afford to become sick.

The tragedy of the father, a retired well-driller surnamed Wang, killing his own child symbolizes the problems of industrial development in northeastern China, where working conditions are dangerous and wages low. Wang's monthly salary of 600 yuan (US$74.95) could not cover the 200,000 yuan in medical bills.

The unequal distribution of medical resources, corruption in the healthcare professions, low efficiency, exploitation by middlemen and other problems pose big challenges to Beijing in implementing its health reform policies.

Wang's meager salary was not sufficient to pay the huge medical expenses for his daughter's care and the 5,000 yuan or 6,000 yuan for his son's annual university tuition, and this brought the family to its knees financially.

In China today, the rich-poor gap between urban and rural areas is conservatively estimated to stand at six to one. Reform of China's financial system means more agricultural villagers are unable to afford to go to school or forces them to drop out of school.

Although being accepted into an urban university brings honor to one's family, all sorts of fees and donations means education leads to a more rigid class system, rather than being a catalyst for social mobility. The 5,000 yuan to 6,000 yuan annual university tuition is 10 times higher than the Chinese poverty line. Statistics show that about 150 million people live under the poverty line.

In Shanghai today, the average cost of one square meter of floor space is 9,250 yuan. That is 1.5 years' income for Wang. A 30m2 apartment is about 276,000 yuan, 40 times Wang's annual income.

Behind the real-estate problem lies a tremendous financial bubble, speculative risk and an excess of supply because people can't afford to buy a house.

The housing problem did not make Wang kill his daughter. But China's inefficient macroeconomic adjustment policies have been unable to cool the overheated economy. And even if they were able to cool the economy, there are fears this would lead to a rise in unemployment and social instability. Housing will be a potential flashpoint in China's financial reforms, and could result in rising bad loans at banks and local government crises.

There are similar human tragedies in Taiwan -- currently thousands of children cannot afford to eat school lunches. The health insurance system is being reformed, but we still do not see any improvement in the quality of health care, the doctor-patient relationship or medical ethics.

Taiwan is facing the same barriers as China. And tragedies like these make one wonder about the agreement reached in the recent Chinese Nationalist Party (KMT)-Chinese Communist Party economic forum to allow Taiwanese physicians to practice medicine in China and to recognize Taiwanese academic degrees in China. Do Taiwanese only see the advantages of these measures, or are they also able to consider the underlying humanitarian concerns?

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