Zhao Gang is a department head in a state-owned financial holding group. His salary is more than 800,000 yuan per year after tax. In addition to all kinds of allowances, his real income is more than 1 million yuan per year.

Zhao's high school classmate, Xiao Can, works in a processing company in a smaller city in central China. His company does relatively well and he earns more than 40,000 yuan per year, which is quite high for his city.

Wang Pei, Zhao's primary school classmate, is a peasant. He does farm work and raises fish during the warm seasons. In winter, he takes up temporary work in towns nearby. He works very hard with a yearly income about 20,000 yuan.

These three people just showcase how differently their income are owing to their different occupations and social status.

In the early 1980s, China's Gini coefficient, or measure of income inequality, was 0.3. By the mid-1990s, that figure had risen to 0.42. Now, in 2010, China's Gini coefficient is 0.48, meaning China's income gap continues to widen.

Li Shi, director of the Income Allocation and Poverty Research Center at Beijing Normal University, analyzed four aspects of China's widening income gap.

First, the income gap between urban and rural areas is enlarging. In 1997, the income ratio between urban and rural areas was 2.6:1, but in 2010 the figure rose to 3.33:1. The gap is not only larger than that of developed countries, but it is also larger than that of many developing countries, such as Brazil and Argentina.

Second, the income of monopolized industries is much higher than the social average income. The average income of electrical power, telecommunication, finance, insurance and tobacco is two to three times that of other industries. When adding housing, welfare and other allowances, the real income gap comes out to about 5 to 10 times higher.

Third, distorted market prices have led to excessive profits in some industries and some management departments have earned illegal income. The allocation of capital, land and natural resources are controlled by the government and the price is not decided by market factors. Therefore some companies can buy land for a very low price and reap extravagant profits, while the relevant management departments get grey income from that.

Fourth, inside the companies, wages and welfare are concentrated toward a few people. In 2008, the average welfare expenditure of central enterprises was 3,397 yuan, with the highest individual income 44,600 yuan and the lowest income 149 yuan.

Due to the lack of a scientific and impartial human resources judgment system and a competitive human resources market, the value of education input in a person cannot be fully shown. One's family background and birthplace often decides whether to secure a good job.

It is becoming harder for children of ordinary families, both urban and rural, to get a high-salary job. Therefore, the rich are getting richer while the poor are remaining poor.

A fair income allocation system is key to the construction of a harmonious society. Some experts have noted that it is more important to solve the unfairness in the primary income distribution than to improve the redistribution policy.

To solve the problem, according to many experts, a series of rights and interests need to be reviewed and updated. An equal social security and job-hunting system should be established. This will then trigger reform in many systems, including household registration, finance, social security, employment, education and health care.

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