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China Among Countries with Wide Income Gap
China has ranked itself among countries where resident incomes are very unequal. The problem of income distribution has become the most noticeable issue among current social problems in China, said Lu Zhiqiang, deputy director of the Development Research Center of the State Council, in his speech delivered at the 35th Annual Meeting of the Board of Governors of the Asian Development Bank (ADB) on May 9.

Since the launch of the reform and opening up drive, people's incomes have been raised, but the gap between the rich and the poor has widened. The Gin Coefficient of China's resident incomes has increased rapidly from 0.33 in 1980 to the critical point of 0.4 in 1994, and has now exceeded 0.45.

The fact that the income gap expands along with economic growth in the process of industrialization is not a phenomenon unique to China, but Lu Zhiqiang noted that China's problem is more complicated than other countries and regions, this is manifested in the following four aspects:

  • Firstly, the income gap is broadening at a very fast pace. In a period of 20 years, China has changed from a country with a very narrow income gap to its entry into the ranks of countries with great unequal incomes, such a speed is very rare in the world.

  • Secondly, the polarization of incomes has a clear community character. Income level is closely related with regions, industries, enterprises and institutions. In terms of residents' incomes, such a yawning gap between different regions, urban and rural areas and different trades as in China is rare in the whole world.

  • Thirdly, the general public has shown dissatisfaction over the present income distribution method, especially they do not affirm that part of high income gained by high-income earners. About 70 percent of people think that "the great disparity between the rich and the poor" has adversely affected social stability. People are showing great discontent with the irrationally high income gained through the monopoly of industries, and with the illegal gains derived from graft and corruption, and power-for-money transaction. Such phenomena are rarely seen in other countries and regions.

  • Fourthly, it is difficult to reverse the trend of the widening income gap. As the widening income gap is not completely caused by the distribution policy, so the problem cannot be resolved only by adjusting the distribution policy. Many other factors, such as disparities in regional and rural and urban economic development, imperfection in economic and legal system construction and limited means and functions concerning re-distribution of incomes, also increased difficulties in reversing the broadening gap.

    (People's Daily May 11, 2002)

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