In the Government Work Report delivered earlier this year, Premier Wen Jiabao vowed to enhance the rational income distribution system as it is an "important manifestation of social fairness and justice".

According to Professor Yuan Gangming with the China and the World Economy Research Center at Tsinghua University, the income distribution reform will steadfastly stimulate domestic demand.

"With the burden of the economic downturn, no specific measures can be taken in investments and exports. The main concern is about pushing up the consumption. And one important task is to speed up residents' income growth, making them capable of consuming. In the long run, adjusting the structure is important for future development and national income distribution. So regardless of short-term or long-term point of view, the program is significant to the national economy."

A report recently released by the Ministry of Human Resources and Social Security showed that in 2011, Chinese residents 'income growth is far below the growth in fiscal and corporate income. It said public revenue in China last year amounted to nearly 10.4 trillion yuan, up nearly 25% from a year ago. That's a much higher increase rate than that of urban and rural residents per capital disposable income. The growth rate of corporate income over the same period is about 20%, also much higher than residents' income.

While the call for income distribution reform is urgent, the program has been difficult to launch. Experts believe that the obstruction of groups with vested interests is an important factor.

Professor Yuan Gangming again:

"The problem with our national income distribution lies in the rapid growth of financial and government revenues. The increase of government revenue outruns that of residents' income. The most important measure is to reduce the government excessive taxes and non-tax income. There are still disputes over the concrete measures to re-adjust residents' income and reduce the government revenue proportion. The key is to solve the core issues in the income distribution plan."

The forthcoming reform program is expected to include a series of measures to further improve the social security system, raise the minimum wage and social allowance standards.

It's also expected to use taxation measures to adjust the exuberant profits reaped by the monopoly sectors and the excessively high incomes enjoyed by certain groups of people, further break the monopoly industries and encourage the development of private capital.

Go to Forum >>0 Comment(s)