The proposal was mired for months in an internal dispute about whether to aggressively scale back the rising salaries and benefits of some officials working for state-owned business and banks. The document that emerged from the discussions is filled with commitments to deal with that issue and other sources of public concern about the gap between the incomes of residents of dirt-poor villages and those living in privileged urban enclaves.
“There are some stark problems in income distribution that need urgent solving,” said the plan, which was issued on the central government’s Web site. “Chiefly, there remain quite large disparities in urban-rural development and incomes, income allocation is poorly ordered, and there are quite serious problems with invisible and unlawful sources of income.” The document was drafted by the National Development and Reform Commission and other central agencies.
The income distribution plan was one of the initiatives promised by the departing Chinese prime minister, Wen Jiabao, who leaves office in March. But it also underscores the extent to which the country’s new generation of leaders under Xi Jinping has also promised to expand state spending on health care, education and social welfare.
Mr. Xi, who was appointed Communist Party chief in November and is set to become state president in March, has said he wants to accelerate economic changes in the spirit of Deng Xiaoping, who began the process of transforming China into a more modern economy after decades of rule by Mao Zedong. But in the process of introducing market forces in China, such changes have starkly widened income disparities.
Since Mr. Xi took office, Chinese news media have reported on a succession of officials who have been accused of siphoning bribes and public money into their pockets. The income plan, however, does not offer specific new initiatives to reduce corruption.
Beyond a general commitment to eliminate sources of illegal income, the plan says that officials must abide by already announced rules to report earnings and assets to superiors. Many experts, however, have said such rules are ineffective without public disclosure as well.
Average disposable annual income for Chinese urban residents in 2012 was the equivalent of about $4,000, an increase of 9.6 percent after taking inflation into account. Average rural net income was just under $1,300 per person, a rise of 10.7 percent after adjusting for inflation, the Chinese National Bureau of Statistics announced in January.
The bureau also said that in 2012 China’s Gini Coefficient, a widely used index of income inequality, was 0.474, slightly higher than levels of inequality in the United States, where income disparity has widened sharply in recent decades and now stands as one of the highest among advanced industrial nations. But some economists have said China’s measure is actually much higher, when illicit and poorly reported sources of wealth are taken into account.
“Deepening reform of the income distribution system is an extremely arduous and complex task of systemic engineering,” the new plan says. “It cannot be achieved in one step.”
Article source: http://www.nytimes.com/2013/02/06/world/asia/china-issues-plan-to-narrow-income-gap.html?partner=rss&emc=rss