Government and Policy

Legislature proposes narrowing the gap in wealth

Updated: 2010-08-24 22:36
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BEIJING - China's top legislature, the National People's Congress (NPC), has proposed a reform in income distribution be launched as soon as possible, aiming to increase residents' income and narrow the gap in wealth.

Officials of the Financial and Economic Affairs Committee of the NPC said they have completed a research report on distribution of national income and made the proposals  to be included in the 12th Five-Year Plan (2011-2015).

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The research report proposes increasing the proportion of residents' income in national revenue and the proportion of labor rewards in the primary distribution of national income. It suggests that the reforms should seek to enlarge the middle class until it becomes the largest sector in society. The report also offers proposals on taxation and social security.

The legislature did not release further details on the proposed reforms in income distribution.

The NPC, for the first time in history, completed 15 research reports on 14 major subjects from March to July to provide proposals for the formulation of the critical development plans for the next five years, after top legislator Wu Bangguo called for the research at the annual legislative session.

According to a World Bank report, the Gini Coefficient for China, a main gauge of income disparity surged to 0.47 in 2009, exceeding the "security line" of 0.4, pointing to the unequal distribution of income which could arouse social unrest.

This figure was 0.21 to 0.27 three decades ago. In the primary distribution of national income, the proportion that goes to wages and salaries, the major source for China's mid- and low-income families, has been declining, according to Yi Xianrong, a researcher at the Chinese Academy of Social Sciences.

The proportion of the total income that Chinese citizens receive from the distribution of national income fell sharply to 57.9 percent in 2007, compared with 68 percent 20 years ago, according to the People's Bank of China.