Home / China / National News Tools: Save | Print | E-mail | Most Read
Economists Identify 'Grey Income' Industries in China
Adjust font size:

The term "grey income" was coined in China after 1978 when the country implemented its policy of reform and opening-up. It describes the significant portion of urban residents' income that is outside the scope of state supervision and control. While some of this income is derived from working additional jobs, some of it is obtained in a more questionable manner. Economists have identified the four largest grey income industries currently operating in the country and their findings were published in the Shanghai Financial News in late March.

Tourism industry

Many Chinese travel agencies ask their tour guides to pay them a considerable sum of money according to the number of tourists in the group they are leading. So "taking a commission" in a variety of ways has become one of the main sources of grey income for most Chinese guides, the newspaper revealed.

Usually a tourist shop offers 20-50 percent of its shopping trade volume to tour guides, which is also considered a "commission" negotiated by the two sides in advance. The store also has to pay a fee based on the size of the group and a parking fee to the agency. In return, tour guides use all their skills to persuade tourists to go shopping in designated stores even if they are unwilling to do so.

"We're worried to accept any tourist group with the number of people exceeding 100," explained the boss of a jeweler's shop at the foot of the Badaling section of the Great Wall near Beijing. "We have to pay a per-tourist fee and parking fee for the tour guides and travel agencies even though tourists may not buy anything in my shop," the boss complained, adding: "I cannot afford to offend travel agencies otherwise they will no longer introduce any tourist groups to my shop in the future."

Medical and health care industry

The medical and health care industry is considered the richest sector in China because it gains the most grey income, the newspaper disclosed. It has become so commonplace that Chinese people are not surprised by such things like medical staff taking hongbao ("red envelope" containing money given privately as a tip, gift, bonus, or bribe), taking a commission and moonlighting. Before a surgical operation, a patient's family has to pay hongbao to medical staff including the operating surgeon, assistants, anesthetists and nurses. "This is so common," said a doctor who was interviewed by the newspaper. "Who dare say that he or she hasn't accepted any hongbao while examining his or her own conscience?" he insisted. "A well-known surgeon can get 5,000-10,000 yuan (US$647-1,294) once being invited to a branch hospital to do an operation."

Taking a commission from medicine sales is considered another form of grey income in the medical trade. "When you go to see a doctor, you'd better dress down as much as possible," said one doctor. "If the doctor thinks you look rich, he or she would write a prescription containing the most expensive medicines. Some doctors even make a thorough inquiry into their patients' occupations and incomes in order to do this."

Teaching industry

Grey income in the teaching industry comes in all shapes, the newspaper reported. Teachers increase income by opening after-school tutoring classes, being invited to deliver academic reports at high pay, being private teachers, and being part-time consultants. Opening after-school tutoring classes and moonlighting are most common.

"I have 12 after-school tutoring classes a week," said a university professor. "I am worn out both physically and mentally. It is beyond my power to teach so many classes, but I have to."

The teachers majoring in economics, finance, accounting, law, and foreign languages, all disciplines closely related to social application and market demand, have more money-earning opportunities. "Some teachers can even earn more than 1,000 yuan (US$130) a day," said one teacher who was interviewed.

Even pre-school teachers are subject to bribes. "My six-year-old son asks me to visit his teachers on festivals, because most of his classmates ask their parents to do so. In this way the kids can get more care and attention," said a woman.

To visit a teacher, parents no doubt have to take along a hongbao or quality gifts. In the last Chinese New Year gala concert broadcast by the China Central Television (CCTV), there was an amusing sketch of parents visiting the president of a private school with luxury gifts to try to obtain entry for their children – everyone recognized the truth behind the skit.

Funeral and interment industry

Usually relatives of the dead are willing to go to a lot of expense in conducting a funeral, the newspaper reported. Employees of the funeral and interment industry understand the wishes of these relatives well, which leads to all sorts of illegal charges.

A cinerary casket that is actually worth only a hundred yuan can be sold to relatives of the deceased at a cost running from several hundred to a thousand yuan, explained an employee of one funeral parlor. Some funeral companies can reap colossal profits by such means. In addition, they list all sorts of charges for transporting the corpses, carrying the coffin, and parking vehicles. By taking advantage of the industry's monopoly position, its employees wantonly raise the prices and force relatives of the dead to pay unnecessary expenses at a time when they are emotionally not able or willing to protest.

Grey income is an inevitable result of the market economy, said Mao Yushi, a Chinese economist. "While indicating the beginning of more active economy, grey income also brings about a series of social problems like the loss of state taxes, the enlarging gap between rich and poor, corruption, and degeneration."

"For common people, the important thing to consider is how and why these 'rich people' can get this sort of money rather than simply looking at how much they get."

(China.org.cn by Li Jingrong, April 9, 2007)

Tools: Save | Print | E-mail | Most Read

Related Stories
Personal Savings Tax a Big Burden: Survey
Each Chinese Newly-wed Couple Spend 125,000 Yuan
Growing Income Divide Hindering Services
China Collects 245 Billion Yuan Income Tax
China Suffers Widening Income Gap
China Announces Measures to Promote Social Justice
Income Distribution System
Top Economists Interpret Income Gap Widening
Time to Tackle Nation's Growing Wealth Divide
Income Gaps Among Urban Residents Looming Large
SiteMap | About Us | RSS | Newsletter | Feedback
Copyright © China.org.cn. All Rights Reserved     E-mail: webmaster@china.org.cn Tel: 86-10-88828000 京ICP证 040089号