Reduce inequality to sustain economic growth

Economy | Vinod Thomas

Three decades of high economic growth in China have served to lift millions of people out of poverty. But, at the same time, the gap between the rich and the poor has widened sharply, threatening welfare, social stability, and growth itself. Tackling inequality, therefore, is rightly at the top of the country's policy agenda.

A natural policy response to the emerging inequality is to try to include all the people in the economic agenda, which, in turn, would expand the possibilities for growth. This greater inclusion would also strengthen the impact growth has on reducing poverty. In China, improving the relative standing of the poor, who need to boost basic consumption, would also aid the government's objective of increasing domestic demand.