Address widening income gap through reforms

A recent report on labor costs in China issued by the national social security authority exposed the high incomes in some monopolistic industries, which are widening the income gap in China.

The disturbing report indicates the necessity to distribute national wealth more fairly to ensure social stability.

Fair distribution would entail the reform of the monopolistic systems in some industries. The central authority should have the powers and the channels to supervise and control the privileges of monopolistic companies. If not, the widening income gap will offset most of the central government’s efforts to boost domestic consumption, because only a small group of people will have the ability to spend money.

The wealth polarization has been in focus in Chinese society for a long time, and reportedly, a new reform plan for national wealth distribution will be issued in the fourth quarter of the year.

The reform should start with the most outstanding fields and with the group of people who have been enjoying high incomes.

The reform should not only adjust the income of wealthy people through taxes and other measures, but also increase subsidies for people with lower incomes, and cut taxes for average wage earners.

It’s also necessary to establish a system to ensure that the wages of middle-income people increase according to the changes of consumer prices and economic growth.

The reform of monopolistic industries is also conducive to promoting market competition and innovation among private companies. So filling the income gap is part of China’s bigger transformation of its industrial structure and economic growth model.

Translated by Li Yang From Beijing News Daily