Progress toward fairer income distribution

The 12th Five-Year Plan (2011-15) period has seen great improvements being made in the income distribution system. In February 2013, the authorities decided to further improve the income distribution system, increase urban and rural residents' incomes, narrow the income gap and manage income distribution according to the Guideline on Deepening Reform of Income Distribution System, which spelt out the overall demand and target of the income distribution system reform during the 12th Five-Year Plan period.

The Amendment to the Criminal Law (VIII) in February 2011 made the refusal to pay workers' dues a crime in order to deter intentional default on paying wages. To narrow the increasing income gap, the Amendment to the Individual Income Tax Law was approved in June 2011, which increased the threshold of individual income tax to 3,500 yuan ($550.1) and changed the 9-level excess progressive tax rate to 7 levels, reducing the tax burden of the middle- and low-income groups and increasing their disposable incomes.

In August 2014, the authorities launched the salary system reform for senior central government enterprise officials by placing caps on their salaries and establishing a differentiated salary distribution system. The authorities have also promoted performance-based payments in many public organizations, including compulsory education schools and health centers such as hospitals. And in January 2015, the authorities decided to establish rank promotion besides administrative promotion channels for grassroots civil servants.