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Home >> Opinion
UPDATED: 14:32, June 22, 2006
Chinese income distribution gap is too great: official
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Vice Minister of Finance, Lou Jiwei, has pointed out that currently the Chinese income distribution gap is too big and even more seriously, the starting point for people to make a good living is unfair.

Mr. Lou led a research on the income distribution issue and published the research article in the Learning Times. He gave the following analysis:

Firstly, the current Gini coefficient, which reflects the distribution disparity of people's income, is 0.46 in China, indicating a phenomenon of uneven distribution. It's also worthwhile to mention that the Gini coefficient in the rural area is 0.37 and in urban areas is 0.34. However, by putting both rural and urban areas together, the Gini coefficient is 0.46. This means that either in rural areas or in urban areas, the income distribution is relatively even, but the income gap between rural and urban areas is too great.

Secondly, the income distribution gap has become large so quickly that it is still within one generation and this could have a large impact on social stability.

Thirdly, the starting point for making a good living is unfair due to natural conditions such as family background and more importantly social policies such as education and health care opportunities and chances for migration.

Fourthly, the unfairness can be seen as part of the process of human development. For example, in addition to unequal education and health care opportunities, the opportunities for people to enter the market are also unfair. Some monopoly enterprise managers' salaries are too high, and enterprises have different revenues for unclear reasons; state-owned enterprises sell their fixed asset at a very low price for a small number of people. Throughout the process of urbanization, the land of many farmers has been occupied without proper compensation and there is no guaranteed wage for rural workers wages, which is already very low.

The research shows that the inequality is largely related to policy-making and policy enforcement which are characterized by very strict policies that are not very strictly implemented due to human factors. To what extend should the policies be strictly enforced is an issue related to corruption and has aroused great dissatisfaction from the public.

Lou Jiwei's analysis is that public policy doesn't pay enough attention to equality to start with and believes that it is also the incomplete reform that has resulted in such unfairness.

The research also showed that the public can accept the idea of prioritizing efficiency, but are not willing to put up with the government's abuse of power. They believe that it was the injustice and inequity from the very beginning of the development that has resulted in such an unequal outcome.

The research also shows that the inequality has led to a low quality of economic growth.

He said that unequal opportunities have caused low creativity and lack of jobs and social assistance has caused a lot of mass incidents. The imbalance of investment and consumption is greatly linked to the gap between the rich and the poor. He predicted that the fast development doesn't necessarily increase more job opportunities, such that within some years, the income distribution gap will remain as large.

He suggested that farmers gradually come to live in towns and cities so that there will be relatively more equal opportunities and that the gap between rural and urban areas will be narrowed.

On the other hand, he suggested that the government should invest more in rural infrastructure construction, rural compulsory education, new model of cooperative medical care and social assistance.

By People's Daily Online

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