University president cautions against growing income gap

By Zhang Ming'ai
0 CommentsPrint E-mail, March 10, 2011
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Ji Baocheng, president of Renmin University of China and a deputy to the National People's Congress [Photo: / Zhang Ming'ai]

The president of one of China's top universities joined on Wednesday a growing number of prominent people who have called for a narrower income gap.

Ji Baocheng, the president of Renmin University, made his remark on the sidelines of China's annual National People's Congress meeting in Beijing. He said that studies by his university showed China's income gap has grown over the past few years and that its Gini coefficient, a main gauge of income disparity, has long exceeded the international standard for the "security" level of 0.40. The latest data pegged China's Gini coefficient at 0.48.

"Although China's GDP grew by more than 10 percent each year, the income gap grew by 1.5 percent per year," Ji said.

According to the National Reform and Development Commission and the National Bureau of Statistics, the wealthiest 10 percent in China is 36 times wealthier than the poorest 10 percent in 2004. They now hold 40 percent more wealth than the poorest 10 percent. Also, in 2004, the top 10 percent controlled 45 percent of the total residential assets compared to 1.4 percent owned by the poorest 10 percent.

Ji said the income gap in urban areas and the income gap between urban and rural residents are the main factors for China's growing income gap. Supportive policies for farmers in rural areas have actually narrowed the income gaps in rural areas, a trend that is not seen elsewhere.

Without a new property tax system – which Ji admits would be difficult to pass – the income gap will continue to grow, Ji said. The wealthy will become even wealthier because they can gain more wealth from investments or bank savings.

Ji suggests that China first attempt to levy a property tax and then a fixed assets tax and inheritance tax.

When delivering this year's government work report, Premier Wen Jiabao pledged to reverse the trend of widening income disparity as soon as possible through unremitting efforts.

China will raise the individual income tax threshold on salaries to reduce the tax burden on low- and middle-income people and regulate excessively high incomes, Wen said.

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