China Increases Government Subsidies To Diffuse Rising Cost of Living

  @mflorcruzm.florcruz@ibtimes.com on December 28 2012 8:37 AM
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The Beijing Municipal Bureau of Civil Affairs announced that beginning Jan. 1, 2013, the city will increase its standard urban living monthly subsidy by 60 RMB -- about $9.60 -- from 520RMB ($83.42) to 580RMB ($93.05). The increased stipend will undoubtedly be a welcome handout, but amid accelerating inflation rates and rising gas prices, it may still not be enough.

According to the Global Times, the new adjustment was approved because of the city’s rapidly rising cost of living. The report claims that the higher subsidy will benefit 1.7 million people.

However, the 11.5 percent increase in subsidized wages that residents can collect may not actually be useful at all. The additional 60 yuan will barely be sufficient to alleviate the financial burdens of Beijing’s residents because the costs of basic living standards have risen as well.

A 57-year-old taxi driver named Li told the Global Times that his basic living costs in Beijing, particularly natural gas prices, have skyrocketed and hurt not only his personal finances but the taxi industry as a whole.  Though taxi drivers are also given a separate subsidy of an additional 1,300 RMB, rising gas prices are sill outpacing any government stipends.

According to the National Development and Reform Commission, gas prices nationwide have increased by 25 percent since 2010. As a result, drivers like Li find themselves barely breaking even after a full eight-hour shift because of rising gas fees and fees paid to taxi management companies.

Aside from gas, food prices are a principal factor in gauging China’s cost of living, as it accounts for more than one-third of the country’s inflation numbers. As economic growth continues in China, inflation has also accelerated.

According to China’s National Bureau of Statistics, in November consumers paid 2 percent more for goods and services than they did the previous year. Though this overall inflation rate is more manageable than last year’s 4 percent rate, inflation has still caused food prices to surge. Food prices in China have climbed 3 percent year-over-year, with prices of vegetable produce seeing an 11.3 percent increase from just last year.

The rising costs of food is said to greatly affect rural families because it accounts for the bulk of their expenses.

Luckily, residents in rural areas outside of Beijing will also be receiving an increased wage -- going from 380RMB ($60) to 460RMB ($73). Unlike those in urban Beijing, the increase will likely have a more significant impact. This 21 percent wage increase is double for those who live within the city limits. By doing this, China’s government hopes to narrow the gap of living standards between urban and rural areas of Beijing.

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