The Beijing News recently published a commentary
calling for closer attention to disparities of per capita income
between different areas. The commentary came in a response to the
recent release of statistics which show a city's GDP being 10 times
that of a western Chinese province.
Gaps between regions and economic scales are very common; it is
the disparities of per capita income between different areas that
demand our close attention, according to Dr. Wei Zhiming from
Nankai University in his article published in the Beijing
News on January 3.
The GDP of Guangzhou, capital city of Guangdong Province, is ten
times more than that of the entire region of Qinghai, a province in
northwest China. Dongguan, a city in Guangdong and Suzhou, a city
in southeast China's Jiangsu Province, also boast greater economic
strength than some of the western provinces, according to the
latest statistics which have captured public concern.
If a city is as wealthy as a province, Wei believes that this
phenomenon is in accordance with economic laws. Commercial
activities in a city are often concentrated inside a few areas.
Even a small town has a "commercial district".
Wei cited South Korea as an example: one third of the country's
business activities take place in Seoul, which houses more than 30
percent of the country's total population. "We cannot hinder the
growth of big cites in order to realize balanced regional
development. We also should not simply equate economic disparity
with a gap in wealth among different regions," he says in the
article.
It is therefore normal to see economic disparities between
different administrative regions. It's also not rational attempting
to achieve a balanced distribution of economic activities in
various geographic regions of an economic entity, he says.
"But we should attach great importance to the gap in wealth
between regions, because this causes polarization in per capita
income. "
"It is true that disparities in average labor productivity exist
among different areas in China, which leads to different living
standards. If production factors: including capital, natural
resources and labor, flow freely among these areas, then income
polarization will be narrowed. Hence liberalizing the economy is
the most effective way to stimulate income growth and bridge the
wealth gap."
Wei says that people should have the freedom to choose their
place of residence as well as their workplace. The Chinese
government must strive to establish a unified and open labor
market, allowing people to freely distribute their human capital
and also give the people many opportunities to maximize their
wealth. The government must take the initiative conducting reforms
in population management instead of permitting passive
movement.
Governments at all levels should carry out effective measures to
abolish barriers to the free flow of capital. Capital allocation
must be optimized to obtain maximum returns, but this process
requires a unified institutional framework. Compared to
preferential policies, savvy investors prefer a transparent and
efficient government administration that freely permits various
economic activities.
If people could choose where they wish to live and where they
wish to work, many areas in China would become sparsely populated,
so it is not necessary to develop the economy in these regions.
Small economic scales do not necessarily imply low incomes and poor
living standards. People engaged in industries with regional
advantages can also obtain substantial incomes and high standards
of living. All of these things promote wealth accumulation and act
in accordance with economic laws.
(China.org.cn by Yang Xi, January 8, 2008)