Who's Middle Class in China?

What is the definition of middle income? Many feel they are scraping by

The Chinese government wants its citizens to think their lowly salaries are a sign of increasing social status, but many beg to differ.

Last Friday the National Bureau of Statistics issued a report on how different income groups spend their time in China. It said people who earned under 2,000 yuan (US$295) a month were in the "low income" category; those on salaries of 2,000 to 5,000 yuan (US$295-US$740) a month were "middle income", while a "relatively high" monthly income was 5,000 to 10,000 yuan (US$740-US$1,480).

Anyone earning more than 10,000 yuan per month was in the "high income" group.

How many families in China are enjoying life like this one?

But many people online were in disbelief by this definition, because even though they were described as "middle income", they were barely scraping by.

The response forced the statistics bureau to clarify that the middle-income definition applied only to the report. "The term 'middle-income group' mentioned in the survey has nothing to do with the income brackets in the general sense," the statement said.

While the World Bank ranks China as an "upper middle income" country with a GDP per capita of US$8,827 in 2017, ranked 73rd in the world, Beijing has never given an official definition of middle income.

"A typical family of three, for example, might have an annual income of 100,000 to 500,000 yuan. There are 400 million people, or 140 million households -- [in that income bracket] who has the means to buy a car, a flat, or go traveling," said statistics bureau chief Ning Jizhe on Monday.

But many say that despite fitting into that income bracket range, they are still struggling to make ends meet.

Guess this family doesn't worry about making ends meet

Wang Xiaoyi, a researcher at the Chinese Academy of Social Sciences wrote an article about it in the Beijing Youth Daily earlier this month.

"The middle-income group, especially those who are young, don't see themselves as such even though their income has reached a certain level. People who are not on low incomes also feel the pressure of living costs -- they're not enjoying the good life. It's as important to boost their sense of achievement as it is to lift people out of poverty."

Welcome to the rat race...

Save More Money!

Even people in the wealthy class aren't leaving enough money for loved ones

As if Hong Kong people don't have enough to save up for -- mortgage or rent, children, education, transportation, retirement, and investments -- and now apparently they aren't leaving enough money behind for loved ones in case they die unexpectedly.

According to a survey by Citibank in December of 1,224 affluent residents who have between HK$300,000 and HK$1 million in investment assets, there is a big gap between people's incomes and what they bequeath to loved ones.

The elderly have more money to leave for their children

For example, singles who are still working have a shortfall as high as HK$2 million, while for retirees it's HK$1.05 million. However when it comes to married couples with children, the shortfall is the widest at HK$4.65 million, while for childless couples it's HK$2.11 million.

"Those families with children need to prepare for their education, so they would need to prepare more" financially in the case of unexpected deaths, says Gordon Tsui Luen-on, managing director of Hantec Pacific in Hong Kong.

The study shows even those in the affluent bracket are struggling to make ends meet, while a record 1.37 million people, or 20 percent of the population live below the poverty line.

Kenrick Chung, chief commercial officer of Charter Management Group, said Hongkongers can voluntarily increase their contributions to the mandatory provident fund (MPF), or invest in annuity to prepare for retirement needs.

Families with children need to save even more money

The MPF has been so badly run and mismanaged with very little returns that most people only contribute the minimum amount and invest elsewhere. To even suggest contributing more to MPF is ridiculous.

So what are we supposed to do? When the stock market is stagnant, interest rates are still low and there are limitations on investing in the property market, how are people supposed to grow their money?

Review: China's Van Goghs

One of the "factories" that churn out copies of famous paintings everyday

On my flight back to Hong Kong, I watched several documentaries, which I much prefer over movies, mostly because I can learn new things about different people, cultures, companies and countries.

A very interesting documentary I saw was China's Van Goghs that was released in 2016. Directed by Yu Haibo and Kiki Tianqi Yu, it focuses on Dafen, in Shenzhen that is the world's largest oil painting village.

Apparently it was started in 1989 by a Hong Kong artist and entrepreneur by the name of Huang Jiang, but with a name like that, he most probably was originally from the mainland. German media outlet Der Spiegel reports he was an errand boy in Hong Kong before he started copying art work and then went back to China to find cheaper space and labour.

Zhao Xiaoyang paints a large version of Van Gogh's portrait

When Huang started there were 20 painters -- now there are over 10,000.

China's Van Goghs focuses on two artist-entrepreneurs: The main character is Zhao Xiaoyang from Hunan province. He, his wife, brother and his brother-in-law have painted over 100,000 copies of Van Gogh's works.

Another character is Zhou Youngjiu from Guangdong, who has a mini factory of his own, where his employees have churned out over 300,000 copies.

There are numerous scenes watching these artisans at work all day, painting the same famous works over and over again. It looks like grinding factory work instead of something that should seem spontaneous or have more artistic merit. But hey, it's a way to make a living.

Zhao has been painting Van Gogh's works for 20 years. He feels that having copied his works for so long that he believes he knows the Dutch artist -- even seeing him in his dreams.

Incidentally Zhao has a client in Amsterdam who he has painted copies of Van Gogh's works for over four years. Apparently their professional relationship is so good that if Zhao can pay for his return plane ticket, this client will host him -- pay for his accommodation and food.

Zhao paints his version of Cafe Terrace at Night

This prospect makes Zhao very excited -- not only would it be his first time going outside of China, but also see Van Gogh's originals up close to help him further appreciate the works he copies daily.

His motivation is very strong because he admits (after having copious amounts of alcohol), that he didn't even finish elementary school education -- it was too expensive for his mother to pay for, making Zhao ashamed of his background. But perhaps this trip will make up for it.

Once he's there Zhao is shocked to discover his client is hardly a gallery owner, but has a souvenir shop where they sell hundreds of these fake copies per month -- at eight times the cost he charges for the paintings.

It's a sad realization for the Chinese artisan, which makes Zhao question his desire to be a so-called artist.

Zhou on the other hand is too busy to go on this trip of a lifetime. In one scene, he berates one of his employees for getting the proportions of a Van Gogh self portrait completely wrong. It had been corrected three times, and now it's almost looks finished, but doesn't look like a decent copy at all.

It is not clear how it got to that point at such a late stage, but the young painter throws down his brush in frustration saying he won't paint anymore, but Zhou ignores him and orders him to fix the painting.

Both Zhao and Zhou realize that if they want to become true artists, they need to follow their own calling -- not copy someone else's works.

The documentary is so interesting because it not only reveals the mundane lives these artisans live, but also delves further into their aspirations not only for themselves, but for their children. They are careful to make sure the next generation "eat bitterness" too so that they know it's not easy to make a living.

Dafen is also a microcosm of China's factory industry and mentality -- that the artisans need to find other ways to make money other than copying others.

Following Zhao in Amsterdam and Paris was fantastic seeing Europe through his eyes, how his preconceived ideas about big cities weren't the same as in China, in particular how clean Amsterdam was. He was also thrilled to see people's appreciation for his original art, when he spontaneously painted in the same spot Van Gogh painted Cafe Terrace at Night.

These little observations are what make China's Van Goghs a wonderful documentary, and it's a reminder of the wage and education disparity in the country that has so far to go before there is more equity in society.

China's Van Goghs

Directed by Yu Haibo and Kiki Tianqi Yu

Released 2016

80 minutes

25% Hongkongers Can't Afford Basic Needs

One-quarter of Hongkongers are considered deprived of basic necessities

The Hong Kong government acknowledges there are poor people in Hong Kong, but it's the number that it can't seem to decide on because it can't determine the exact definition of poverty.

It prefers to just look at income levels, but critics say this is not enough, as some people may own flats, but have no income and have run out of savings, or they barely make enough to make ends meet and live in squalid conditions. Some don't want to bother reaching out for social services or they don't qualify for certain subsidies.

Chinese University researchers have come up with another way to determine if someone is poor by seeing if they can afford 23 essential items or services. These include three meals a day, a dental check-up once a year, afford new clothes or go out with family or friends once a month.

Researchers say poverty should be calculated by deprivation

If they were not able to afford at least two or more of these items they were considered deprived.

They interviewed 1,476 people in 2014 and the same participants again last year. They found that one in four of them were deprived last year, 24.7 percent, which compares to 28.8 percent in 2014.

Researchers say the city's economic growth, historically low unemployment ration and higher salaries attributed to fewer deprived people, but it doesn't mean poverty has been eliminated at all.

Of those who took part in the study, 26.7 percent were unable to afford to get a regular dental check-up, though it was down from 38.7 percent three years earlier.

The study also showed that those who were defined as deprived were 1.5 times more likely to be less physically healthy, and 1.3 times more likely to be less mentally healthy compared to those who could afford all 23 items and services.

Chinese University associate professor Wong Hung who conducted the study said the research showed the government's official definition of poverty underestimated those who were socially disadvantaged in Hong Kong.

Handouts don't solve the poverty issue, researchers say

The government makes its calculations based solely on income and household size, and so the poverty line is at half the median monthly household income according to household size. Those who live below the poverty line are considered poor.

With that calculation, one in five people were living below the poverty line last year, a record high.

Wong said, "Handing out money or cash vouchers to people might not necessarily solve the city's deprivation problem. The government should implement more specific community programs so people can directly benefit from them."

This is not a new suggestion and the government doesn't really do anything, instead depending on NGOs and charities to fill the need.

Wong and his colleagues are suggesting to the government that it include deprivation as part of its determination of who is in poverty or not. It would probably increase the numbers which the authorities wouldn't be happy about, but these people are in desperate need of services and resources to keep their heads above water.

With Hong Kong being such a wealthy city, there is no excuse not to help the neediest.

Trying to Survive in Hong Kong

There's a lot of foot traffic on the streets, but who's spending?

As if we need more proof it's getting more expensive for people to live in Hong Kong when their salaries aren't keeping up with inflation -- a latest study says households are in nearly twice as much debt as they used to be 10 years ago.

The Legislative Council research division released its latest survey that found grassroots families are earning less than what they spend every month, and that the Mandatory Provident Fund (MPF) that employees and employers contribute to monthly is not enough to retire on.

in 2005, the average debt carried by each household consisting of mortgages, credit card advances and personal loans was HK$349,100. That amount has almost doubled to HK$646,100 last year.

Overall the outstanding balance of household loans was HK$1,594 billion, 70 percent of which are mortgages, more than twice the amount a decade ago.

Try buying a matchbox and paying it off before retirement

While people try to save for emergencies like unemployment and illness, the report says, "in the face of slowing economic growth, slackening social mobility, continued inflation and escalating property cost in Hong Kong, many lower- to middle-income families may not be able to do so".

According to the latest data from the Census and Statistics Department, the report estimated the average household expenditure in 2015 was HK$27,600 per  month, a 46 percent rise from a decade ago.

Lower-income households aren't able to save as much these days; those with incomes of HK$11,000 to HK$16,000 a month could barely cover basic expenses, having to fork out another HK$400 from their savings.

This contrasts with those making HK$61,000 to HK$85,000 who are able to save HK$23,700 a month.

Housing makes up the biggest monthly expenditure at 36 percent. Flat prices and rentals have surged by 223 percent and 100 percent respectively between 2005 and 2015, forcing many to resort to taking out bigger mortgages.

Retired couples spent between HK$6,600 to HK$38,300 per month, while their MPF only averaged HK$144,000, which covers only less than two years of spending in some cases. Relatives would have to chip in around HK$4,500 a month just to keep up.

Seniors don't have enough money to be self-sufficient

We're hoping the government is paying attention to this study -- this is why Hong Kong people are frustrated and unhappy. Employers are getting away with not paying their employees what they are worth with the excuse that the economy is bad, but then it's harder to afford even basic necessities to get through the month.

This study shows that one has to have bought a flat and paid off the mortgage before they have retired. But in many cases, because the price of flats keep going up, people may be in their late 30s or 40s before they can afford one, and they may or may not have paid it off within 25 to 30 years.

And there is also the issue of how big a flat they can afford... who wants to live in a matchbox flat of 152 square feet for over 20 years as they try to pay off the mortgage?

The income gap is getting worse and worse here even though the economy is slowing down, things aren't "cheap". We are all still beholden to landlords who seem to live on another planet when it comes to charging rent.

But the government isn't going to impose rent controls anytime soon so we are still going to have to pay more for every service or item we buy because of greedy landlords.

People can't even aspire to bigger and better things because they are just trying to keep their head above water.

How does this give people here any hope that things are going to get better? A good chunk of them are just barely surviving...

Fact of the Day: Hong Kong's Most Expensive Flat

Looking up at Opus Hong Kong, the city's most expensive flats

Swire Properties is probably chuffed now that it has sold its last flat in the Frank Gehry-designed Opus Hong Kong for a record HK$509.6 million ($65.8 million), making it the most expensive one in Asia.

The 5,444 square-foot unit is on the 12th and top floor on 53 Stubbs Road, and includes two parking spaces and a 1,508 square foot rooftop. So that translates to HK$93,608 per square foot.

The Frank Gehry-designed building is on Stubbs Road

It took three years to finally sell the last unit, but the record high price also demonstrates the uber rich don't mind paying a few hundred million to secure a prestigious address; meanwhile the rest of us plebians are struggling to pay the bills because everything's more expensive than before, and we're doing more work at work because our employers are not hiring staff to replace those who have left.

The wealth gap is growing bigger and bigger in Hong Kong and the government doesn't seem to be the least bit concerned about this serious issue.

It probably thinks the two groups can coexist just fine -- with one group serving the needs of the other to keep the economy going...

Hong Kong's "McSleepers"

An elderly woman sleeps at a branch of McDonald's

Last month, a woman in her 50s or 60s was found dead in a McDonald's in Ping Shek Estate, in Kowloon Bay, 24 hours after she entered the fast-food restaurant.

The shock of the discovery has sparked renewed calls to help these so-called "McRefugees", or "McSleepers", because they have no place to go, and the 24-hours McDonald's restaurants are a good option because they are warm and clean.

Social workers have been trying to bring attention of these homeless people to the Hong Kong government, but it still refuses to acknowledge these people need help because they consider them to have roofs over their heads -- albeit temporary ones.

As a result the government says it only has some 800 homeless people in the city, whereas social workers believe it's at least double that.

A woman was found dead in a McDonald's in Kowloon Bay

These homeless people have little or no income, and are forced between choosing to pay for expensive rents but starve, or live on the streets and have some food, and many pick the latter option.

"A subdivided flat of just 30 sq ft in Sham Shui Po would cost you HK$2,000 ($258) a month to rent these days," says Lee Tai-shing, chief community organizer for the Concerning Comprehensive Social Security Assistance and Low Income Alliance.

The Social Welfare Department offers short-term hostel placement, employment guidance, and emergency funds to cover short-term rent payments and other living expenses.

While it's nice to know the department will help out financially in a pinch, temporary housing is not the answer for these homeless people.

And so social workers are calling on the government to impose rent controls so landlords cannot sharply raise the rent every year.

When interviewed, one "McSleeper" said he used to live in a sub-divided flat in Sham Shui Po for HK$1,000, but then it became too expensive and dirty, whereas coming to McDonald's was at least "clean and nice".

The 48-year-old is a cleaner who also gets partial Comprehensive Social Security Assistance for low-income adults, and so he can have a monthly income of HK$6,000 to HK$10,000 depending on how many hours of work he can get.

Subdivided flats are expensive and cramped, dirty too

He has slept in a Sham Shui Po McDonald's for four years now and finds the location convenient, as his job is unstable and where he gets assigned to work changes frequently.

Although he has been offered public rental housing three times, he has refused each time, as the location is in an inaccessible area that transportation costs would be high.

While Sham Shui Po and Tai Kok Tsui have been areas with cheap housing, the government has been gentrifying these areas, making housing more expensive for people who are scraping a living.

A bed space costs HK$1,800 to over HK$2,000, while a sub-divided room can cost HK$3,000.

Social workers have lobbied the government to set aside social housing and communal areas for these low-income people, but people have the "not in my backyard" mentality.

However, when people are given a place to sleep and keep their possessions, earn a living and be able to maintain a sense of dignity, it gives these people hope, and helps them not only to socialize with others, but also makes them feel a part of the community.

Isolation, says social workers, is the real root of the homelessness problem.

"It's okay in the first year or two of rough sleeping, but stepping into the fourth and fifth year, it's hard not to have some sort of mental issues as well as other illnesses," says Wong Hung, associate professor in social work at Chinese University.

We go back to what Financial Secretary John Tsang Chun-wah said earlier, that HK12,000 was too much to pay for a dishwasher.

Has he and his colleagues visited these "McSleepers" and asked them how much they need to live a dignified life? The minimum would probably be HK$12,000 if not more.

And why is he sitting on trillions of dollars in reserves when we have at least 1,500 homeless people who need shelter, and over a million others who cannot afford to buy enough food to eat each day?

We pay taxes for a good reason -- to help those in need.

We are a rich city, and yet the buck stops with Tsang, for no good reason.

We ask again -- why is he our Financial Secretary?

Fruitless Political Rhetoric

From left: Wang Guangya, Li Fei and Zhang Xiaoming in Shenzhen

Today was the last chance for the central government to persuade pan-democrats to accept the political reform proposal in a meeting in Shenzhen, but to no avail.

We all knew it was an exercise of going through the motions, with each senior Chinese leader giving veiled threats in their speeches.

Earlier Zhang Xiaoming, director of the central government's Hong Kong liaison office said pan-democrats would be punished in the next year's Legislative Council election.

Then Basic Law Committee chairman Li Fei insisted the government's proposal was "democratic, fair, open and just", and that the plan had received broad support, as it had taken into account the people's "reasonable views".

One wonders what "reasonable views" means...

Wang Guangya, director of the Hong Kong and Macau Affairs Office, stressed Beijing  would "unswervingly and sincerely support" Hong Kong in electing the chief executive by popular ballot in 2017.

The pan-democrats address the media after the meeting

"Regardless of the resistance it faces, the central government would make its best effort," Wang said.

"The central government is willing to engage different sectors in Hong Kong, including the pan-democrats, and to force a consensus within the maximum limit based on the Basic Law and the relevant decisions of the National People's Congress Standing Committee."

Is the central government really engaging a variety of sectors in the city? And what does "force a consensus" mean?

All this rhetoric for a four-hour meeting that went no where. We don't blame the pan-democrats, they are only standing their ground, and reflecting the wishes of a good number of Hong Kong people.

The central government has no idea what democracy looks like and in keeping with its interests, wants to ensure only politically correct candidates run for chief executive.

But what has 17, almost 18 years of chief executives under Beijing's leadership given Hong Kong?

There is an even greater income gap between the rich and the poor, there is no long-term planning of the city in terms of pollution, transportation, construction, real estate, the economy, education, social issues... the list goes on and on.

That's because no one is looking out for OUR interests, Hong Kong people's interests.

We want a leader who speaks up for Hong Kong and fights for us.

And yet Beijing does not want to allow that to happen under "one country, two systems".

The city is fast becoming mainlandized much to local residents' horror. Things have changed so much in less than 20 years, one shudders to think what's going to happen in the next five.

Meanwhile the 79-day Occupy or Umbrella Movement brought us together temporarily, but now what? We are back to being disparate souls, focused on our jobs and wondering if we'll be able to afford a home -- ever.

But oh sorry -- those aren't the most pressing issues at the moment -- what's really important now is to decide if we're patriotic enough to accept the political reform package.

The mainlaindization of Hong Kong continues...

Quote of the Day: So-called Colour Revolution

Beijing continues to brand the Umbrella Movement as a colour revolution

Even over two months after the protests ended, we are surprised to hear Beijing condemn the Umbrella Movement again, branding it as an attempt at a colour revolution.

General Sun Jianguo, a deputy chief of the General Staff of the People's Liberation Army, made the comment in an interview with Oriental Outlook, a magazine affiliated with Xinhua.

It's not the first time a senior official has pronounced this, as former deputy director of Beijing's Hong Kong ad Macau Affairs Office Chen Zuoer also said something similar back in October, but Sun is the first from the military to say something disparaging about the protests.

When he was talking about subversion campaigns by foreign forces, Sun said:

Hostile forces have always attempted to make Hong Kong the bridgehead for subverting and infiltrating mainland China. The illegal Occupy Central activities in 2014 came as minority radical groups in Hong Kong, under the instigation and support of external forces... orchestrated a Hong Kong version of a colour revolution.

His words are so predictable that it's no wonder that Hong Kong Chief Executive Leung Chun-ying kept on his refrain about external forces interfering in the city. He obviously got those key words from someone in Beijing.

Except that "external forces" could not be farther from the truth.

The peaceful protests were about social problems in the city that the Hong Kong government (and Chinese government) have not resolved properly, especially since the handover. It's about skyrocketing housing prices, freedom of speech and press, about one person, one vote that was promised by China, and the ever-widening wealth gap.

Trying to deflect the root cause of the problems makes Beijing look even more cowardly and in denial of the real situation. However, for the most part that's what it's been doing for decades, and has gotten away with it for this long...

Observations of Seattle and Hong Kong

A snowman checking his iPhone in the shop window

Living in Hong Kong, going to the United States reminds you what real customer service is.

Rockefeller Center a la Tiffany & Co

As soon as you walk into a shop, staff greet you with, "How are you doing today? Is there anything I can help you with?" which takes you aback because you're not used to such friendliness. In Hong Kong, retail staff just go through the motions because that's what their boss told them to do.

Even more jarring is paying at the cashier, and they ask you again how your day is going, did you find everything you needed? At this point I just want to pay and leave. But at places like Target, there are extra savings if you have the store card, and even better if you have coupons in hand. Makes it an even longer wait for people behind...

And you can pretty much return everything (except sale items). Apparently Nordrstrom has a very good return policy. A friend who was returning some items at the counter, was told by the staff there that someone returned an item of clothing that was bought over 20 years ago! The store did honour it and gave them back the money...

The stores, particularly the big box ones like Walmart, Costco and Target make you realize how much stuff Americans buy. There are rows and rows of items many are useful, others... have no real use, or don't have a good design or made well and end up in the sale heap.

In front of the Seattle Art Museum

How do people come up with these products but more importantly how do they wind up on the shelves of these stores?

Being in Seattle after Christmas, there were major holiday sales. My friend went to Gymboree and managed to get children's clothes for under $3. She also got a casual top at Banana Republic for less than $7. It really makes you question why pay full price for anything...

Which brings me back to Hong Kong -- we don't really have outlet stores (unless Citygate in Tung Chung counts), and everyone is out to find a bargain. People outside of the city have the perception that we can buy anything we want in Hong Kong, but in many cases you do have to pay a premium for it. 

This leads to the discrepancy between the rich and the poor -- the wealth gap in Hong Kong is every increasing, while in the United States at least, the poor and middle class can get by if they look for deals.

A gorgeous blue sky day at Pike Place Market

Here's hoping 2015 will be about greater equality for the vast majority of the people in Hong Kong who just want to be able to live decent lives. Is that too much to ask?

Short-Sighted Measures

Hong Kong's a financial powerhouse but has major social issues...

Nathan Road in Mongkok was cleared earlier this afternoon, but protesters are back this evening and have re-occupied the area. We knew it would be tough to clear Mongkok and it's going to take a while, if not a lot of police manpower to keep the roads clear.

Meanwhile another think tank -- how many do we need in Hong Kong? -- has come up with the brilliant solution of solving the housing crisis by building more hostels for young people to live in and save up 14 years' worth of salary to put a down payment on a flat.

The Bauhinia Foundation has strong links with former Chief Executive Donald Tsang -- who we may add did nothing to ramp up the construction of social housing during his seven-year tenure.

The foundation also suggests easing the repayment terms of student loans, enhancing skills-based training, reviewing sub-degree courses and creating more well-paid jobs.

We're all for the latter but how's that going to come about when bosses are stingy types and rents are sky-high?!

It's ironic the foundation is pointing out things we already know -- inflation and home prices have far outpaced income growth, and that this was the key obstacle in upward social mobility of young people aged 15-24.

"If young people are uncertain about the opportunities for moving upwards, they will have no interest in or passion for society," centre chairman Dr Donald Li Kwok-tung said. "This is harmful to social stability."

Which is why so many young people were out in the streets protesting! Hello!

The foundation studied statistics from 1991 to 2014 that showed a young couple now had to save for 14 years and four months to put down a deposit on a 40 square metre flat (about 400 square feet) -- up from eight years and eight months in 1991.

The calculation was made on the average property price of private residential units and that the monthly mortgage payment would be about 40 percent of a couple's salary of HK$29,000 ($3,740).

Hong Kong also has the distinction of having the most unaffordable housing for the fourth straight year among 360 cities and countries, as well as the smallest homes according to US consultant Demographia.

While education remained the key driver to having a good income, the centre also noted the incomes of the better-educated had been eroded by inflation, while 40 percent of young people were working in hotels and retail which resulted in little chance of advancement.

And so the foundation proposed the government build youth hostels so that young people could save up to buy flats.

Many criticized this suggestion because it doesn't actually tackle the problem of property prices being out of reach of young people, and the apparently collusion between the government and property developers will only make the plan of building hostels another opportunity for the latter to rake in more money.

The entire economic system in Hong Kong is so skewed towards the rich that they keep getting wealthier, while the rest of us pay for their salaries because they have control over so many essential services in the city.

But the people in charge won't be changing the system anytime soon... so that's why building hostels is their brilliant solution.

This think tank seems to think that once young people have a home everything will be fine. They are obviously not looking at the big picture and in the long run...

An Even Bigger Income Gap

We still don't know exactly where the money comes from, but we now know that "grey income" totalled 6.2 trillion yuan in 2011, accounting for 12 percent of China's GDP.

The results were released by the National Economic Research Institute in Beijing and published in Caixin magazine on Monday.

The study surveyed 5,300 households in 18 provinces and 66 cities. It found most of this money, from undocumented sources, was held by only a few people, where the urban rich make almost 21 times the poorest people -- an income gap which is many times more than the official figure of 8.6 times.

It also estimated that the per capita income of China's richest 10 percent in urban areas last year had an income of 188,000 yuan, 3.2 times the official number.

"Grey income", which is also known as hidden income, can come from various sources, from outright bribery, to under the table transactions, and gifts, say from parents to teachers.

So much for sporting a super expensive watch many times your salary, or ditto that Chanel bag... which is perhaps why the super rich are now preferring subtle hints of luxury than large designer logos that instantly label them as nouveaux riche.

What's really interesting is how people were willing to be interviewed for the survey, and what this small sample size tells us about the financial situation in China. The study is backed by the China Reform Foundation, an institution affiliated with the National Development and Reform Commission.

Wang Xiaolu is the senior researcher who led the study and has said in previous interviews that official figures were determined by those who volunteered information.

However, these studies compared alleged consumption with legitimate income, where researchers used a sophisticated algorithm to calculate the gap between income and consumption.

As a result this shows the Gini coefficient, which reveals income disparity, is much higher in China than the 0.5 figure released by the National Bureau of Statistics in January. The number 0 reflects perfect equality, while 1 is perfect inequality. A reading above 0.4 is considered a serious warning sign.

Seems like the Chinese government is fudging its numbers again, or is in complete denial about the ginormous income gap that seems to be getting bigger and bigger. Since these figures are somewhat government endorsed, what does this say about the Chinese leadership in its bid to crackdown on corruption as well as the beneficiaries of this "grey income"?

John Tsang, Man of the People (Not)

Does Hong Kong's Financial Secretary know who are the middle class?

Financial Secretary John Tsang Chun-wah was ridiculed back in February when he claimed that middle class people like to drink coffee and watch French movies. He also proclaimed he was part of this socio-economic group.

A recent survey by the Bauhinia Foundation Research Centre has shown that high incomes, owning property and having other assets, such as savings or bonds are the top indicators of being middle class.

Some 45.5 percent of interviewees say people who earn HK$30,000 to HK$60,000 ($3,868-$7,736) a month are considered middle class, while 25 percent thought the median income of the middle class was about HK$22,000.

"The survey is aimed at helping us understand what the public thinks of the middle class," said Donald Li Kwok-tung, chairman of the Bauhinia Research Foundation. "The study will be useful in forming policies targeting [their needs]" and was not aimed at defining the term," he said.

The foundation commissioned Chinese University's Institute of Asia-Pacific Studies to conduct the survey of 1,005 people in July. Other results included 56.7 percent saying people who owned properties worth HK$2 million to HK$8 million were middle class, while 63.7 percent thought those with assets of HK$500,000 to HK$6 million excluding properties made the cut.

While these results seem reasonable, surveying 1,000 is barely a drop in the bucket for a city of over 7 million people. And we wonder who was interviewed and what their salaries are.

Nevertheless, Alvin Lee Chi-wing, district councillor and chairman of Voice of the Middle Class noted the threshold for defining middle class had risen and joining it was getting harder. He said that it was much easier to rise in status in the 1980s and 1990s. But now most top-level jobs are occupied by older people.

"It's not possible now. It would be very hard [for young people today], unless their parents helped out in some way -- perhaps by funding their deposit for a flat," he said.

As for Tsang, he has no right to claim he is in this category, Lee says. "Personal preferences and behaviour should not be counted as any indicator of being middle class. [Tsang's] salary alone would lift him way above the middle class," Lee said.