China needs to establish an incentive system to encourage companies and wealthy people to make donations, said a political advisor.

"Wealth gap has been expanding and a large number of people need assistance," said Gu Shengzu, a member of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), China's top advisory body.

"The government should take a variety of measures to achieve income redistribution, such as taxation and donation," Gu said during the ongoing session of CPPCC National Committee in Beijing.

Gu said donation has not become a widespread practice in China. Private donations by Chinese reached a record high of 1.7 billion yuan (US$212.5 million) last year. But the amount was equal to only about one yuan from each person.

A survey conducted by the China Charity Federation shows 75 percent of annual donations to China come from abroad, 15 percent from domestic wealthy people and 10 percent from ordinary people.

Another survey shows that fewer than 100,000 out of the 10 million registered businesses in China have records of donation.

Gu said the government needs to improve the incentive system to encourage businesses and individuals to make more donations through favorable tax exemption policies.

He also suggested that large corporations establish charity funds in line with universal world practice.

(Xinhua News Agency March 10, 2006)