Five Major Problems in China's Income Distribution

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Last updated at: (Beijing Time) Thursday, June 19, 2003

Five Major Problems in China's Income Distribution

Along with the continuous and speedy development of the Chinese economy the income of the Chinese people has witnessed a quicker increase too. However a report recently issued by the subject group of the political department of the Ministry of Finance holds that behind the normal increase of income there do exist some problems which can not be neglected.

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1. A ceaseless widening of the gap in income distribution and the aggravated division of the rich and the poor

This mainly manifests in the following ways: First, the difference of the population income in general is getting wider and wider from year to year as indicated in the Gini Index, which has already exceeded the standard line as internationally acknowledged. The index rate has seen an increase of 1.62 times within a span of 10 years with that for 1991 indicating 0.282, in 1998 0.456, in 1999 0.457 while the year of 2000 an index rate of 0.458.

Second, incessant widening of the income differences between the urban and rural population. 1990 saw an income proportion of 1: 2.2 between the urban and rural population; 1995 a rate of 1: 2.71 and 2000 1: 2.79 while the year of 2001 it rose to a proportion of 1: 2.9;

Third, the income differences are expanding from region to region. In 2000, the average population income in China's east was 2.26 times that of the west and it saw a three times difference between the highest and the lowest;

Fourth, it saw a further aggravation of income difference among various trades and walks of life. The income difference between different trades began to show in the middle of 1980s, went on to 2.23:1 in the middle of 1990s and that of the year 2000 a rise again to 2.63:1;

Fifth, employee's income between different units of various economic natures is widening up. As to the wage for employees in the units of SOEs as against that of the collective economy, 1985 saw an average difference of 1.25:1, widened to 1.63:1 in 2001. As for the wage difference for the employees in collective economy in comparison to those of other natures it saw a ratio of 1.49:1 in 1985 and it rose to 1.77:1 in 2oo1.

Sixth, it saw an obvious speeding-up of the difference of income among various internal levels in towns and cities. Especially the recent two years witnessed a big increase of difference between the higher income as against that of the lower income. The statistics made in the first quarter of 2002 indicated that the gross income of the 20 percent population with higher income accounted for 46.2 percent of the total volume of income. Instead, the gross income for 20 percent population with lower income made up only 6 percent of the total volume of income, the difference between the two being 7.66 times.

2.Concentration of amassed wealth is more and more increasing with the difference of family fortunes tending to become bigger and bigger

The latest statistics indicates that the 10 percent of wealthy families accounted for 45 percent of the total properties of the urban population. That of the 10 percent families with the lowest income only came to 1.4 percent of the total properties and the rest 80 percent of the population own 53.6 percent of the total family properties.

In the meantime, the financial property of the urban population tends to concentrate among those families with higher incomes. The families of 20 percent of population owning the most financial properties accounted for some 66.4 percent of the total financial properties of the urban population while the lowest 20 percent owning only an average of some 1.3 percent of financial properties.

The Gini Index shows 0.51 for family properties among the city dwellers at present in China, an index indicating a much higher of 0.32 than the average income of urban population.

3. It indicates a coexistence of polarization between the "equalitarianism in distribution" within the system and the "extra-large difference of income" without the system.

There is no complete eradication of "equalitarianism", which is mainly manifested in the distribution of salaries (not including incomes beside the salary). The income distribution indicates a less difference in most of the SOEs, government organs and institutions and among groups of the people whereas at the same time, there is in existence a phenomenon of "extra-large difference in income distribution" beyond the salary distribution. The income aside from the salary, the monopolized income and the unlawful abnormal income constitute the major reason for over-large difference of income distribution.

4. Irregular distribution of incomes

First of all, the wage payment is irregular. The wage payment in arrears does exist to a different extent in many places in the country. Second is the irregular drawing of wages. The wage drawing outside the plan of work and pay for enterprises and the drawing outside the base wages are commonly practiced. Third, the establishment of complementary pension among part of the enterprises has exceeded 4 percent for a standard entry, an increase of income in an alternative way. Fourth, the management personnel of enterprises take too casual an attitude towards the "cancellation of posts" that is short of a reasonable mechanism of restriction.

5. The income structure is on the whole not within a framework of reasonability

This is mainly expressed in the following: First, the structure of wage income is unreasonable with a low wage within the system while a higher salary outside the system and it sees great variation of items that are not included in the wage system. Second, the specific gravity for income distribution as according to multi-factors hasn't been brought to show. And there is still some differences to make up as required by the central government for "allowing, encouraging the benefit distribution with the participation of such factors as the capitals, technologies and management capableness, etc. The income distribution pattern as according to multiple major factors by city dwellers still falls far behind the regular way. For other major factors to participate in the income distribution still needs to be further improved.

By People's Daily Online

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