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Income distribution reform (2)

By Wu Yixue  (China Daily)

08:23, October 23, 2012

The Gini coefficient measures income distribution on a scale of zero to one and it indicates a relatively reasonable income gap if measured between 0.3 and 0.4. If it is between 0.4 and 0.5 it signifies a large income gap. According to Li Shi, director of the research center of income distribution and poverty under Beijing Normal University, China's Gini coefficient was 0.48 in 2007.

A World Bank report also indicates that 1 percent of families in China have 41.4 percent of its wealth, a higher degree of wealth concentration than in the United States, where 5 percent of people hold about 60 percent of its wealth. If the nation's income disparities are not addressed, the wealth polarization in China will continue to widen.

A recent report by the Ministry of Human Resources and Social Security said the country's income gaps among different groups have further widened in recent years and called for efforts to curb the unregulated income increase of monopolies.

Any progress in narrowing the ever-widening income gaps would be welcome, as reform of the established income distribution system has been continually obstructed by firmly entrenched vested interests.

However, in addition to the unequal income distribution between State-owned enterprises and private companies, the government-tilted income distribution pattern has also been to blame for China's current widening income disparities. Statistics show that the per capita income of China's residents grew 13.7 percent from 2002 to 2011, much slower than the 20.4 percent growth in government fiscal revenues during the same period. More importantly, not enough government revenues have been used for projects to improve people's livelihoods, such as education, healthcare, government-funded housing and social security. In 2011, only 30.6 percent of the country's fiscal revenues were used for such a welfare network, compared with 52 percent in the US and 63 percent in Japan the same year.

A fair and reasonable income distribution system is essential for constructing a harmonious society. It is hoped that in the forthcoming income distribution reform program, the government can really face up to the causes underlying the current income disparities to realize Wen's promise that "we will not only make the 'pie' of social wealth bigger, but also distribute it well".

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Email|Print|Comments(Editor:厉振羽、张洪宇)

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