Commentary: Narrowing income gap top priority

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Last updated at: (Beijing Time) Saturday, December 27, 2003

Commentary: Narrowing income gap top priority

With the country's per capita gross domestic product (GDP) expected to exceed US$1,000 this year, the Chinese economy is steering into a new phase which will underline its balanced development.

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With the country's per capita gross domestic product (GDP) expected to exceed US$1,000 this year, the Chinese economy is steering into a new phase which will underline its balanced development.

As the end of the year approaches, it appears increasingly foolproof to endorse the forecast that China's GDP will top 11 trillion yuan (US$1.33 trillion) in 2003, a year-on-year increase of 8.5 per cent.

That means the country, with a population of 1.3 billion, will cross the threshold of US$1,000 worth of per capital GDP into a critical development stage for a better-off society.

International experience indicates that during the period when per capita GDP ranges between US$1,000 and US$3,000, a developing country will witness drastic changes in its social and economic structure for greater prosperity.

As the world's largest developing economy, China is surely no exception. Actually, the country has already made known its ambition to quadruple its economy and raise its per capita GDP to US$3,000 in the first two decades of this century.

Over the past 25 years of reform and opening-up, the country has amazed the world with an average annualized economic growth of 9 per cent.

And this year, the Chinese economy not only survived the impact of severe acute respiratory syndrome (SARS) outbreak but significantly picked up against other obstacles like natural disasters.

The new per capita GDP achievement certainly manifests the increasing clout as well as the growth momentum of the Chinese economy. But being a development milestone, it also entails a shift in the focus of development strategy from high-speed growth to harmonious and sustainable development of all aspects.

The SARS epidemic sounded an alarm that economic progress can no longer be achieved at the cost of other social development.

Moreover, the widening income gap has become a serious problem as the nation's prosperity is unevenly shared.

Now, as the country's overall economic strength approaches a new altitude, it is high time for the government to redefine its development priorities in favour of the good of the people.

Latest statistics show the country's fiscal revenue has already surpassed 2 trillion yuan (US$241 billion) so far this year, accounting for 18 per cent of the GDP.

Such a swelling coffer will provide the government with much more room for manoeuvring in fiscal and monetary policy.

The government's recent announcement that it will continue its pro-active fiscal policy next year for a balanced growth is a laudable and timely change from the excessive use of treasury bonds for economic construction.

However, the slow growth of farmers' income implies that a much more concerted effort by the government is needed to narrow the yawning gap between the rich minority and the impoverished majority.

The roughly 4-per-cent growth of farmers' income this year can be claimed as a hard-won victory against the impact of the SARS outbreak which fell heavily on the rural people. But it still falls far behind that of the country's GDP and urban residents' income.

The meager average annual income for China's farmers is only about US$300. So, in a sense, the new per capita GDP level is only a starting point toward a more desirable goal of a minimum annual income of US$1,000 for everyone in this country.

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