Socio-economic Polarization and Political Corruption in China: A Study of the Correlation

Abstract

China's two-decade market reform has widened the income gap to a significant degree and caused the development of socioeconomic polarization in urban areas. Since the 1990s, a large proportion of the employees of state-owned enterprises (SOEs) have suffered from the absolute decline of living standards. Either they have been thrown out of work or they have to receive reduced wages and rewards. These people now constitute an overwhelming majority of the urban poorest. This (re-)impoverishment of China's working class in an era of economic prosperity only partially results from the impact of market forces. It is mostly a consequence of the rampant, omnipresent and organizational corruption committed by government-appointed SOE directors and their collaborators in party-state apparatuses. The causal relationship with political corruption makes the growing economic inequality particularly threatening to the communist regime.