Experts urge focus on mending social disparity, curbing inflation

By Wei Tian (chinadaily.com.cm)
Updated: 2012-11-11 14:07

Tackling social disparity and guarding against inflation should be the Chinese government's priorities if it is to realize its goal of doubling residential incomes over the next eight years, according to experts.

A report delivered to the 18th National Congress of the Communist Party of China, has vowed to double the per capita income of Chinese by 2020, compared to 2010 levels.

Gao Huiqing, an expert with the economic forecasting department at the State Information Center, said any reform in income distribution should focus on improving the social welfare system.

A first step could be higher dividends from State-owned enterprises, which currently retain most of their profits rather than returning them to society, Gao told The Beijing News.

Zhang Monan, another researcher with the Information Center, added there should be a strong focus on the education and healthcare systems, with State-owned enterprises putting an end to the practice of "unequal payment for same work".

According to data from the National Bureau of Statistics, the per capita net income of China's urban residents was 19,109 yuan ($3,065) in 2010, and 5,919 yuan for rural residents.

Yang Zhiyong, an expert in fiscal policy with the Chinese Academy of Social Sciences, warned that doubling per capita income is not necessarily the same as multiplying salaries by two, as lower and middle income earners would benefit far more from such a move.

Zhang added that there were also inflation risks being caused by increased operational costs within organizations, but those could be offset if companies were willing to invest in technical upgrades aimed at improving productivity.

Gao said companies also still faced overcapacity problems, and while improved incomes may lead to increases in demand, it could be 5 to 6 years until the country saw any significant improvement in the current supply-demand imbalance.