China's problem now is that the value of the labor has been greatly underestimated in the market, as a result of the more-supply-than-demand employment structure. Employers acquire extra profits by forcing comparatively disadvantageous employees to accept low payments.

Perhaps through a collective salary consultation mechanism stipulated by the Labor Law and the Labor Contract Law, workers can talk about salary increases with employers. The government, at the same time, should raise the lowest wage level, or present an outline for wage categories. Labor authorities should intensify their supervision and penalties to prevent salary exploitation. The bottom line is to deal with and improve the wages at grassroots level.

How would you explain the relationship between efficiency and equity as stressed by General Secretary Hu's report?

Su: As we know, our previous primary distribution system was more focused on efficiency, which is also determined by China's reality. China's gross domestic product (GDP) per-capita, however, has reached a level above $2,000. Late Chinese leader Deng Xiaoping, who initiated China's reform and opening-up drive in the late 1970s, emphasized a common prosperity after per-capita GDP reached $1,000. That's why equity has been given equal importance with efficiency in both primary distribution and redistribution this time around.

Given an ill-disciplined wealth distribution system, we need to restore its order by eliminating salary defaulters and curbing the excessive discretion given by employers in deciding the level of salary payments.

Wang: Equity in primary distribution means that everyone gets what he/she deserves. But this doesn't necessarily mean that part of capital income should be ceded to reward laborers. Normally, the earned income is determined by marketing rules, and the government intervenes whenever unfairness is found.

The tax policy has been a regular method to redistribute social wealth for social fairness. However, China has found it hard to effectively curb a growing income gap despite its tax policy. What can be done about this?

Wang: Theoretically, it is given that taxation policies can be effective in adjusting wealth distribution. However, China's property reporting and real name deposits systems are not yet operating efficiently, thus weakening the effectiveness of current tax policy in redistribution of social wealth.

The building of a social security and public service system covering all Chinese citizens has not yet been achieved. Some say that this process will cost the government a fortune. How much do you think is actually needed for this?

Wang: China's current fiscal revenue stands at a staggering 4 trillion yuan ($533 billion) annually, and is fully capable of financing such a system, under which every Chinese citizen is provided for.

But other projects are also waiting for public spending, like insurance for low-income earners, a comprehensive health care system and compulsory education, and all of these need large financial input and investments. The government has to balance its priorities.

Su: Whether an all-inclusive social security network is affordable to the government or not is preconditioned on how many benefits it offers. As long as the level of relief is appropriately defined, China is now able to build such a shield for its people.

The government's share of the national disposable income has been on the rise over the past few years, but the growth rate of actual income for residents is lower than that of GDP growth. Usually, as an economy develops, the proportion of money going into state coffers to total national income should shrink. How then do we reverse the current situation?

Wang: China's GDP growth maintained an 11-percent growth in the first half of 2007, while the consumer price index saw a year-on-year increase of 4.3 percent in the corresponding period. However, ordinary citizens were pressurized due to inflation, because the increase of their income failed to hedge the rising living costs. Actually, state tax revenue increased by 30.6 percent in the first six months, three times that of GDP growth.

We used to attach great importance to raise the share of state revenue in national income and raise the share of the Central Government's revenue in total state revenue. It's the right time to adjust this distribution pattern. For this purpose, I suggest less taxes and a reshaping of the revenue distribution relationship between central and local governments.