A developing problem

Unlike the income gap in other countries, the rural-urban disparity among Chinese residents is a developing problem. While the income gap expands, the country's economy grows rapidly, which more or less helps keep the decrease in incomes for low-income residents in check. It also makes it possible to adjust the national income distribution. Generally, it's comparatively easier for a country to make changes to income distribution patterns under conditions of fast economic growth than doing it against the backdrop of economic stagnation.

Although the income gap is widening, the Chinese Government has adjusted relevant policies and established certain welfare schemes to allow low-income residents a share of China's fast economic growth. These measures have alleviated the situation and provided guarantees for further improvements for the rich-poor disparity. They include the social security for low-income residents in urban and rural areas; a tuition-free, nine-year compulsory schooling system; medical and unemployment insurance schemes; minimum wage standards; and direct agricultural subsidies and agricultural tax elimination. While some of these policies increased low-income residents' salaries directly, some boosted their spending through subsidies. Others offered them guarantees of basic living standards. Insufficient as they are, these social security policies for low-income groups have distinguished China from other developing countries experiencing similar situations.

In addition, the problem of China's widening income gap rests more with high-income residents who own the majority of China's ballooning wealth. Their incomes increased much faster than anticipated, due in part to the 20-year old individual income tax system that has yet to be improved to effectively curb tax evasion and corruption. But we don't think China's income distribution has become polarized till now.

How to fill?

The Central Government has attached greater importance to the national income distribution issue in recent years and designated special research teams to find reasons and solutions to the problem in order to speed up national income distribution reform.

At the 13th Session of the 11th NPC Standing Committee in February, the National Development and Reform Committee proposed four measures to speed up reform with other ministries: strive to increase farmers' incomes; beef up support for low-income groups; steadily raise the salary income of workers; and enhance individual income regulation.

In a bid to increase farmers' incomes, the government will continue to increase the prices for major agricultural products and enhance subsidies for agriculture. Stronger financial and fiscal support will be provided to help farmers develop specialized cooperatives and create new income sources. The pace of urbanization will be accelerated to help farmers find jobs in cities. The county-level economies will be strengthened to create more jobs for local farmers, and professional training will be provided to farmers.

To raise the salary incomes of workers, the country vowed to build a salary increase mechanism and improve the minimum salary standard system. The merit pay system will be implemented in schools providing compulsory education, and public hospitals or health and medical centers.

With respect to beefing up support for low-income groups, basic pensions for enterprise retirees will be adjusted. The standards for basic-living allowances and social assistance in rural and urban areas will be improved to alleviate the living burden of low-income groups.

All these measures and policies are expected to keep China's widening income gap in check and allow fairness to prevail in the national income distribution scheme.