Op-Ed Contributors

Prioritizing income distribution

By Chi Fulin (China Daily)
Updated: 2010-12-06 07:16

Controlling the income gap between sectors is also necessary. According to statistics issued by the National Bureau of Statistics, the highest income was 11 times the lowest income across sectors. The extraordinarily high incomes of monopolistic sectors should be regulated to narrow the gap between the highest income and lowest one to seven times. The key to upgrading the consumption of urban and rural residents lies in the formation of an equitable and rational national income distribution pattern.

According to international experience, 40 to 45 percent of the population will constitute the middle-income group in the later stages of industrialization. In China the middle-income group currently accounts for about 23 percent of the population, which shows that the development of the middle-income group lags behind the industrialization process.

Enabling 2 percent of the population to become middle-income earners every year means that in five years time they will account for 33 percent of the population. By 2020, this group will be 40 percent of the population, and closer to the level of middle-income countries.

In the forthcoming five-year plan period, it should be a priority to establish transparency. For example, "sunlight wages" should be promoted in sectors where gray income exists. On the basis of rationalizing wage standards, all sorts of subsides and allowances should be sorted out and regulated to improve the transparency of income.

Property rights also need to be better protected. This is not only a basic requirement, but also a basic guarantee that residents' property income will increase. The widening of the urban-rural income gap is largely due to the unsound rural land and property rights.

It is proposed that reform of the property rights system should be deepened in accordance with the Property Law. Protecting private property rights should be further strengthened in the whole legal system. And private property rights should be included in the basic rights of citizens so as to strengthen their protection. Administrative legislation in this regard should be further strengthened and implemented. Related provisions and regulations affecting the protection of private property rights such as the Regulations on Demolition and Removal of Urban Houses should be sorted out, amended and regulated. Related laws and institutions concerning requisition of private property should be streamlined and principles and procedures for requisition of private property should be further re-enforced.

More efforts should be made to establish legalized property declaration institutions and a multi-layered system of supervision should be developed.

The author is the director of Hainan-based China Institute for Reform and Development.

(China Daily 12/06/2010 page8)