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Income gap rings alarm
* Source: Global Times
By Guo Qiang
Stepped-up efforts to reform the way China spreads out its wealth are being reviewed amid warnings and fears that a widening income gap is jeopardizing social stability across the country.
A plan to curb the yawning wealth distribution will be drafted, according to officials with the National Development and Reform Commission (NDRC) who declined to give a timetable. The efforts come as experts warn that the nation can ill-afford a growing disparity in earnings.
Such a plan could be written into the country's next Five- Year Plan for 2011-15, according to the 21st Century Business Herald newspaper.
State media outlets have featured intensive coverage on the issue, with the latest report appearing Tuesday in the overseas edition of People's Daily, which commented that China is faced with a growing income gap and an accompanying sense of social inequality despite a steady growth since the 1980s in the national average salary.
The Xinhua News Agency reported earlier this month that the top 10 percent of the richest people earned 23 times more than the poorest 10 percent of people in 2007 - up from 7.3 times in 1988.
Cong Yaping and Li Changjiu, economic analysts with Xinhua's Center of World Studies, warned that China's Gini Coefficient - an indicator of income inequality - has exceeded 0.5, threatening poor economic security, a weaker development outlook and social instability, the Xinhua-owned Economic Information Daily newspaper reported last week.
The warning threshold, as commonly recognized by the international community, of the Gini Coefficient is 0.4.
A World Bank report said the index for China surged to 0.47 last year.
Income inequality in the country was also highlighted by a widening income ratio between urban and rural residents, which is at 3.33:1 this year, compared with 2:56:1 in 1997, according to the latest figures from the National Bureau of Statistics.
Yang Yiyong, director of the Social Development Research Department at the NDRC, warned that China can't afford any further rises in the Gini Index, as growing disparity could result in social unrest and "could even cause distrust in the country's public-ownership economic system."
"Social problems, including migrant workers consecutively taking their lives and serial attacks on schoolchildren, are related to conflicts stemming from the income gap," Yang said.
Yang's words referred to seven unrelated attacks on primary school and kindergarten students in less than two months, in which more than a dozen children were killed. Also this week, the number of apparent suicides at Taiwanese company Foxconn hit 10.
The rural-urban income gap constituted a major part in the overall gap, Yang said, urging the free mobilization of labor and the implementation of equal pay for equal work, both of which are hindered by the current household registration system, or hukou.
People's Daily reported that the existing hukou system has helped push up the gap between the rich and poor.
Citizens with rural hukou cannot generally enjoy the same social benefits as urban residents, even though they live and work in cities.
The increasing gap between the rich and the poor has also raised concerns that China will follow some Latin American countries, such as Brazil, where the Gini index once reached 0.69.
Yang, however, said such concerns are unnecessary, as countries adopt different development patterns.
Li Shi, director of the Income Distribution and Poverty Research Center at Beijing Normal University, noted a growing gap between monopoly in-dustries and other types.
He said employees at monopoly industries, including telecommunications, finance, insurance and tobacco ones, can earn two or three times more than those working in other industries.
The gap could widen to five to 10 times if housing, employees' welfare and other forms of income are taken into account, Li told Xinhua.
Meanwhile, the wages proportion of China's GDP growth has been decreasing for 22 years against the backdrop that China is on track to replace Japan as the world's second-wealthiest country, Zhang Jianguo, an official with the All-China Federation of Trade Unions (ACFTU), told workercn.cn, a website under the group.
The proportion peaked at 56.5 percent in 1983, but it fell to 36.7 percent in 2005, he said, and that did not show major improvements in recent years, the report said.
Zhong Dajun, director of the Beijing Dajun Economy Observe Institute, however, cautioned that any reform would be difficult, as it would involve various interest groups, while "the rights of workers should be strengthened, and their voice should be expressed so as to determine that they are not underpaid."
The income gap will not only bring social unrest but also hit the country's economy, Zhong warned.
Officials say tackling the growing income gap has been a top priority for the country's leadership, with Premier Wen Jiabao pledging to increase the proportion of residents' income to the entire national income, and to use financial and tax leverage to narrow the income gap and promote social security.
Meanwhile, senior officials have headed to different localities to learn about income distribution for the much-anticipated policy change.
Kang Juan contributed to this story
Global Times
Though from Global Times, one would like to know that if this report is correct then how will it affect China, in so far as:
1. Political stability.
2. Change in policy to pay attention not only towards the economic resurgence of China as a whole, but also on the social issues as eradicating
a. the income gap.
b. eradicating poverty.
c. improving social security and stability.
How has the Hokuo system helped in increasing the gap? It appears to be a very benevolent system where none can 'go under', since all aspects of existence is catered for.
What is meant in the report - 'growing gap between monopoly in-dustries and other types'?
What is exactly meant in real terms of the report - The gap could widen to five to 10 times if housing, employees' welfare and other forms of income are taken into account, Li told Xinhua.
The report states -Zhong Dajun, director of the Beijing Dajun Economy Observe Institute, however, cautioned that any reform would be difficult, as it would involve various interest groups, while "the rights of workers should be strengthened, and their voice should be expressed so as to determine that they are not underpaid."
Could this be explained in real terms?
The report states - The income gap will not only bring social unrest but also hit the country's economy, Zhong warned.
How will social unrest hit the country's economy? Strikes are not allowed I believe.