Inequitable income distribution can affect social stability. China began pursuing income distribution reform in 2004. A comprehensive plan was supposed to be completed in the fourth quarter of 2012, but nothing has been released.

Hua Sheng, a renowned Chinese economist, told the Bingdian Weekly, a China Youth Daily weekly supplement, "The current system of income distribution is chaotic and the distribution of income and wealth is enormously imbalanced." This means income distribution reform is necessary.

China should prioritize land reforms. Such reforms are essential for raising social fairness and justice, and narrowing the ever-widening wealth gap.

The main reason for China's wealth inequality is tied to the unequal distribution of property income, Hua Sheng said. The distribution of land profits is very unequal. Benefits and opportunities for rural residents are also unequal. Discrimination against rural citizens exists in employment, education, medical services and social service sectors.

Rising house prices, hidden income and official corruption increase the severity of the wealth gaps between the rich and poor. This situation is known as the "Matthew Effect," a phenomenon where "the rich get richer and the poor get poorer."

Government should establish a property tax system that covers property transactions and ownership, Hua Sheng said. The government has extended value-added tax reforms to nine provincial regions on a trial basis after they were first launched in Shanghai last year.

Income distribution reform is bound to harm the interests of certain social groups. Some media outlets argue that interest groups comprised of corrupt officials, monopoly enterprises and property and resource industries are the three main groups hindering the release of the income distribution reform plan.

"In fact, I don't advocate tax reform as a breakthrough measure, it is too difficult. I suggest land reform," Hua said. The government should take control of investments into real estate development and the occupation of rural arable land, and incremental profits should be given to migrant workers and their family members.

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