While the Chinese Nationalist Party (KMT) government is making a big deal of last year’s 10 percent economic growth rate, most people have not seen any of this growth. With falling real wages and rising commodity prices, to most people it feels more like a negative 10 percent growth rate. There is an immense gap in perception between the government and the public, and this is a warning that the wealth gap may expand further.
GDP gives the total value of the products and services produced in a country in a given year. According to data from the Directorate-General of Budget, Accounting and Statistics, the average GDP per capita increased by 10 percent last year, or US$2,119 per person, compared with 2009. Since the New Taiwan dollar has strengthened, this translates into more than NT$43,000, or more than NT$170,000 for a family of four. So why hasn’t the public experienced an increase in income?
There are three reasons for this. The first is wealth concentration, as most of the GDP increase has found its way into the pockets of a small group of the wealthy, while none has trickled down to the general public. This is easy to see if we take a look at how the already large difference in household incomes continued to expand last year: The incomes of the richest 20 percent of households is now at an all-time high of 8.22 times greater than those of the poorest 20 percent.
Second, real wages still have not returned to the level of 12 years ago, despite the GDP growth last year. It is clear that the wages of working people continue to fall.
The third reason is that, using 2006 as the base period, the consumer price index has increased by 5.48 percent during the past five years, housing prices are increasing and the prices of daily necessities are skyrocketing, further decreasing disposable household incomes.
Real wages are falling, prices are increasing and all the benefits of economic growth are going to a small group of wealthy people. This is why most people don’t feel that their daily lives have improved despite economic growth. On the contrary, they feel that things have taken a turn for the worse, as if the country is experiencing a contracting economy.
The government waxes poetic about the 10 percent growth rate, while most people feel as if economic growth is lagging; and the government protects the 18 percent preferential interest rate for military personnel, civil servants and public school teachers, while the general public earns 1 percent in interest. This is not a matter of relative deprivation; it is real deprivation.
Hu Wen-hui is a media commentator.
TRANSLATED BY PERRY SVENSSON
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