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Action needed now to confront wealth gap
(China Daily)
Updated: 2005-01-11 08:46

The widening wealth gap identified by the Beijing Municipal Bureau of Statistics in a recent report underscores an immense challenge facing not only the capital, but the country as a whole.

In the report on the capital's social progress, the disposable income gap between the richest group and that at the bottom of the social ladder was found to have increased from 3.1:1 in 2000 to 4.7:1 in 2003.

This growing disparity has occurred as the city strode towards building itself into a world-class metropolis with double-digit economic growth.

Striking as it is, Beijing's example presents a microcosm of what is going on across the country.

While China continues to amaze the outside world with its stories of rapid growth, the country's Gini Co-efficient a standard measure of income inequality has been gaining altitude at a speed similarly shocking.

Though researchers remain divided on the exact figure the country's Gini Co-efficient stands at, most of them are agreed it has already exceeded the 0.40 threshold internationally viewed as a cause for concern.

An expanding economy has delivered a better life to most Chinese people since the country initiated reforms and opened to the outside world a quarter of a century ago.

China has lifted hundreds of millions of people out of absolute poverty during this period, making itself an inspiring example in the global campaign to fight poverty.

But, as the country's market-orientated reforms further deepened in recent years, the benefits of robust economic growth have not been shared by all in society. Wealth is, to some extent, disproportionately distributed. There is a yawning income gap within and between urban and rural areas.

Increasing media reports have highlighted an emerging group of urban poor, struggling to survive in booming Chinese cities. Their predicament certainly justifies more concerted efforts on the part of government.

Yet, the more critical problem that will confine the long-term development of the national economy, as well as our society, remains the rural-urban income gap.

In 2003, the nationwide per capita disposable income of city dwellers was 8,472 yuan (US$1,024) while for farmers it was only 2,622 yuan (US$317).

Even though the past year of 2004 appears a good one for the country's some 800 million farmers thanks to a substantial recovery in grain prices, it is still too early to claim that a turning point has come in narrowing the income gap between rural and urban areas.

But the relatively fattened pockets of the farmers bear out the necessity of continuing government support in the war against poverty. Strong policies and financial support on the part of China's authorities was a great boon to farmers' income growth last year.

The market has proved its capacity in promoting efficiency during the country's ongoing transformation from central planning to market competition.

However, economic growth, by itself, will not address the problem of inequality.

To allow social development to take root and economic growth to be sustainable, China needs to squarely confront social and economic hurdles.

By boosting economic growth, the country has made remarkable achievements in the fight against absolute poverty in the past two decades.

That growing income inequity is a by-product of fast growth should not be tolerated.

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