How far before people in China getting rich?

15:45, March 07, 2011      

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China's gross domestic product (GDP) reached 39.7983 trillion yuan or 5.8791 trillion US dollars at average exchange rate in 2010, more than Japan's 5.4742 trillion US dollars, to become the world's second largest economy only next to the United States.

The rate of Chinese average annual GDP growth set at 11.2 percent between 2006 and 2010, which was much higher than the same period annual growth of the world economy; and it was 1.4 percentage points faster than China's annual average growth for the 10th Five-Year Plan period (2001-2005).

In the face of glittering feats China has made, assets have kept flowing into the hands of the government, the payment for labour has kept dropping, and the nation's assets have increasingly channeled into monopoly industries, and this has become an irrefutable fact. Then, how Chinese nationals will have a bigger share of GDP growth? How to reduce the income disparity between the various industries and regions. Standing at the starting point of the 12th Five-Year Plan (2011-2015), we should make inquires into the query -- How far before people in China getting genuinely rich with the nation's growing national wealth.

Of late, the State Council at a regular executive meeting discussed and approved in principle the draft amendment to the Income tax law, adjusting or uplifting marginal ordinary income tax brackets. In other words, China will lift the taxation threshold, the amount of which residents income is taxed as against its current threshold for personal income tax, which is 2,000 yuan or 304 US dollars.

Some sources, nevertheless, indicate that China will adjust upward the personal income tax threshold, and many experts acknowledged that the entire tax exemption volume is expected to adjust at the crucial node and it would thus open the curtain of China's personal income taxation reform.

China's revenue from personal income tax or PIT totaled 394.9 billion yuan in 2009, 63 percent of which came from wage earners, according to date of the Ministry of Finance, and the function of the personal income tax for adjusting income differences has not been brought into fuller play, and wage earners have become as a matter of course the main tax source. So, experts hold that raising the tax exemption volume of the income constitutes a kind of fair and reasonable consideration.

Gao Peiyong, head of the Finance and Trade Economics Institute under the Chinese Academy of Social Sciences (CASS), noted that the person-to-person disparity in term of income is originally comprehensive collection object and not differences merely from a single asset or project. Under the condition of not calculating the comprehensive level, the function of control in taxation regulation has been, however, only limited to one single asset or project at most.

As a matter of fact, income ratio between China's urban and rural residents in 1997 was 2.6 to 1 in 2010, while in 2010, it had grown to 3.33 to 1, not only higher than developed nations but also exceeded that of such developing countries as Brazil and Argentina. Income from monopoly industries in China has far exceeded that average social income at large and, according the Ministry of Human Resources and Social Security, the average wages of employees in such trades as the electric power, telecommunications, finance, social insurance and tobacco businesses is twice or three times that of their counterparts in other trades and, if with housing accommodation and other benefits are taken into account, the wage gaps could be anywhere from five to ten times as much.

Zheng Xinli, deputy director of the Economic Committee from the CPPCC National Committee, further indicated that education, medical service, social security and urban infrastructure development realms and so on all fell short of demand, and the backward public services also hinder the individual consumption.

Meanwhile, it is essential to improve the farmers' income in real earnest, continue to give more policy support to the low-income areas in a bid to spur swift economic growth in these areas, raise the income for residents, adjust the distribution pattern of the national income and work unceasingly to increase the payment for labour in the primary assignment proportion, as suggested in a proposal submitted by the Central Commie of the China Zhi Gong Party (CZGP), one of China's Non-Communist parties composed of returned Overseas Chinese and relatives of Chinese nationals living abroad, to the CPPCC National Committee.

By People's Daily Online and its author PD reporter Yin Xiaoyu













 
 















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(Editor:张心意)

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