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Income distribution reform on the way

Readjusting income distribution in China in a reasonable manner was both a long-term task and an urgent issue to address at present, said Premier Wen Jiabao Saturday in his government work report delivered to the annual parliamentary session in Beijing.

Wen said the government would take three major measures in 2011, including increasing the basic income of low-income people in both urban and rural areas, putting more effort into adjusting income distribution, and vigorously overhauling and standardizing income distribution.

"It's the first time income distribution reform has appeared in the central government work report," said Chi Fulin, Executive Director of the China (Hainan) Institute for Reform and Development.

Chi added that he believed Wen's report reflected the central government's commitment to income distribution reform.

"The three measures solve the two outstanding problems existing in income distribution reform, including excessive disparities in wealth and unfair allocation," Chi said. "In fact, the key of income distribution reform lies in the government's resolution to solve it. As Wen said, 'Through unremitting efforts, we will reverse the trend of a widening income gap as soon as possible and ensure that the people share more in the fruits of reform and development,' I believe it is OK. China can solve the problems on income distribution."

Necessity for Income Distribution Reform

"China's income distribution has bordered on the edge of unfairness," said He Keng, Deputy Chairman of the National People's Congress Financial and Economic Committee.

A recent World Bank report noted that China's Gini coefficient, a main gauge of income disparity, exceeded the "security line" of 0.4, indicating unequal income distribution could cause social unrest. Moreover, the latest status report issued by the Ministry of Human Resources and Social Security indicated that the average income of senior administrators at state-owned enterprises was 100 times the average income amount.

The most urgent problems in the reform are to limit excessively high incomes and raise low incomes, He said.

He also attributed the unequal allocation to two factors.

"At first, in the long term we paid more attention to efficiency rather than fairness," he said. "Second, because China's economy is not so developed, leaders at all levels have put too much value on economic development in a one-sided pursuit of gross domestic product."

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