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Last updated at: (Beijing Time) Thursday, March 18, 2004

China's income distribution policy urged to be adjusted

With US$ 1000 as a criterion, China has turned from a low-income country to a lower-medium-income country. The new development phase means not only a "golden development period" but also a "period with outstanding conflicts". The problem of income gap is a major social conflict in the development stage.


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With US$ 1000 as a criterion, China has turned from a low-income country to a lower-medium-income country. The new development phase means not only a "golden development period" but also a "period with outstanding conflicts". The problem of income gap is a major social conflict in the development stage.

Liaowang (Outlook) Weekly pointed out that wide income gap is unavoidable in the development stage and how to curb the widening of the income gap is a question we must face up in order to avoid social turbulence.

In 2003, the nationwide per capita disposable income of city dwellers was 8, 472 yuan while the net income of rural inhabitants only 2, 622 yuan. In that year, some media released "China 400 richest" whose total wealth was 301.1 billion yuan, three times as much as that of the Gross Domestic Product (GDP) of Guizhou Province in 2000.

A report issued by the Ministry of Finance in 2003 showed that the overall gap of residents' income, represented by Gini Coefficient (Gi) was widening every year and has gone beyond the internationally recognized bottom line. The figure was 0.282 in 1991, 0.456 in 1998, 0.457 in 1999, 0.458 in 2000, an increase of 1.62 times in ten years.

Professor Li Qiang with the School of Humanities and Social Sciences of Tsinghua University pointed out some new characteristics of the wealth differentiation in recent years. The differentiation at large is exasperated while the rate of differentiation was slower than that in the middle of 1990s; serious wealth concentration; severe differentiation among regions; peak differentiation between cities and rural areas; serious internal differentiation in cities and rural areas. In terms of social structure, China is still a pyramid society in which there is a big shortage of middle class while underclass and class with medium and low income are unduly separated from the whole society, forming economic bottom society with related culture and social value.

Li Peilin, researcher with Chinese Academy of Social Sciences held that we must tackle the problem of fairness from adjusting the income distribution policy and regulation. Under the system of social market economy, initial distribution is mainly determined by fair play and market mechanism and the state mainly depends on laws, regulations and policies to effect influences and controls on the re-distribution. If the state over-interfere with the initial distribution in the market, it will definitely affect efficiency, while there will be widened gap should the state give it a free rein.

By People's Daily Online


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