The widening income gap between China's rich and poor has become a major
concern. There are three reasons for the disparity: social system structural
problems, the difficulty of economic development and deficiencies in public
System problems are quite significant in the widening income gap. A lot of
people believe the income gap is caused by corruption and illegal income. This
reflects a typical system problem. At present, the government is trying to
resolve a series of problems left over from the old system, especially
corruption. The basic definition of corruption is to use public power for
private benefit. Under the traditional Chinese system, this was easily done.
Even a sales representative could exercise a certain amount of public power.
Corruption occurs when preference is given. The reform of the market economy
aims to restore a large number of private rights. Corruption is not a problem
caused by reform, but a problem exposed in the process of reform. The only
solution is to proceed with economic reforms.
There is another systematic problem pertaining to monopoly industries. Some
enterprises monopolize production and operation resources. A relatively large
income gap therefore appeared between natural resources industries, monopoly
industries and the competing industries. These problems are not caused by a
market economy. On the contrary, they are the result of the absence of the
The difficulty of economic development is in the imbalance of income in rural
areas, between urban and rural areas, as well as regional disparities. This kind
of gap usually occurs in under-developed and developing economies. As a lot of
China's labor force is still concentrated in rural areas, it is difficult to
raise the income of farmers. Even those who have migrated out of the countryside
find it difficult to increase their earnings, for there are limited jobs for
these workers. Approximately 80 percent of workers are in the low-income
category. Some do not even earn enough to be taxed. This problem can only be
fundamentally resolved by sustainable economic development and full employment.
It is extremely difficult to obtain an average income level through social
redistribution by means of tax and subsidies.
There are also problems in public policy, which the central and local
governments need to address. The government needs to decide how increase the
earnings of low-income earners, how to protect the rights of low income earners
and how to ensure their education and basic medical services. If these policies
are not sound, those who need special care and support will receive inadequate
To fundamentally resolve these problems, the government must push forward
reforms to ensure sustainable and long-term development, adjust public policy
and create more jobs. Perhaps public policy adjustments can be made in the short
term, but system reforms and economic development must be undertaken in the
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