From Chinese Press

Delicate issue of income parity

(China Daily)
Updated: 2011-03-02 07:43

As the annual sessions of the National People's Congress and the Chinese People's Political Consultative Conference draw close, experts propose that people's overall income be increased during the 12th Five-Year Plan (2011-2015), because the plan states national wealth should be distributed more fairly, says an article in Shanghai Morning Post. Excerpts:

The most direct way of raising people's income is to transfer government revenue and companies' profits to families. Though more national wealth should be distributed among the low-income group, doing so would harm the vitality of the economy. If distribution is not done properly, it will increase low-income people's earnings in the short rather than the long term.

A more sustainable way of increasing people's income would be to deepen the primary wealth distribution reform. The existing policies restricting people's mobility and urbanization are the main cause of the huge income gap between rural and urban areas. Therefore, except for some mega-cities, the urbanization threshold should be widened, for it can help promote economic growth and employment, and thus benefit more people.

Chinese companies have accumulated huge profits and taken up a large share of the national income because of relatively high return on capital owing to low labor cost and monopoly.

But we have to review the situation dialectically to determine whether government revenue accounts for a high proportion of the national income.

The Chinese government's revenue, especially the share of tax revenue in GDP, is not high compared with that in other countries. The problem lies with the huge non-transparent extra-budgetary revenue, which should be reduced urgently.

(China Daily 03/02/2011 page9)