On July 31, the National Bureau of Statistics released new figures which cast a worrying light on the income gap in China. These figures show the gap still widening between rural and urban areas and according to the Gini coefficient, upon which the scale of 0 represents perfect equality and 1 absolute inequality, the current gap has reached the upper safety limit of 0.4.

 

During the first half, the average cash income of farmers grew 11.9 percent from the same period last year to 1,797 yuan, 0.6 percentage points lower than the same period last year; while the average disposable income of urban citizens grew 10.2 percent to 5,997 yuan, 0.7 percentage points higher.

 

Five famous Chinese economists expressed their opinions on this phenomenon.

 

(Wu Jinglian (L1), renowned economist from the Development Research Center under the State Council; Xiao Zhuoji (L2), professor from Peking University; Zhao Renwei(L3), former director of the Economy Research Institute under The Chinese Academy of Social Sciences (CASS); Fan Gang (R2), director of National Economics Research Institute from China Reform Foundation; Li Shi (R1), professor at Beijing Normal University)

 

Ineluctable widening trend

 

Fan Gang, director of the National Economics Research Institute of China Reform Foundation, said the income gap is inevitable and will last for five to ten years. He said that in essence, people’s income will rise step by step but that due to social development and unbalanced growth, the income gap would become wider and wider.

 

Although overall their quality of life has improved, residents in rural areas and many common workers in cities still feel unsatisfied with the current situation, when compared with the rapid income increase for people in better-earning jobs.

 

According to Fan, this trend is one of the by-products of social development. Most people seem deeply convinced that this issue is rooted in corruption, and are thus revolted by it. However, Fan believes that even if corruption were totally eradicated in the future, the income gap would still exist.

 

Wu Jinglian, a renowned economist from the Development Research Center under the State Council, pointed out that the continuously widening income gap in China reflects some problems in the economy and is urgently in need of a resolution. The government should take active measures to tackle the gap’s root causes and thus curb its expansion.

 

Social reform cannot be its “scapegoat”

 

Professor Li Shi from Beijing Normal University stated that the development gap between China’s urban and rural areas should carry the weight of the blame.

 

According to him, the income gap between urban and rural areas now reflects a gap amounting to 40 percent of the national total. Since 1997, the difference in urban and rural development has grown in severity and has now become the main cause for the income gap. Differing policies across different regions have caused unbalanced economic development and widened the gap. Only by broadening economic reform can this gap ever be bridged, said Li.

 

Zhao Renwei, former director of the Economy Research Institute under The Chinese Academy of Social Sciences (CASS), also opposes simply blaming economic reform as the principal cause for the income gap, or that economic progress should be impaired because of it.

 

He argued that on one hand, the income gap eliminates simple equalitarianism and that to a certain extent, each person gets what they deserve and that on the other hand, the income gap is a fair price to pay for social development and reform as long as it does not get out of control.

 

It cannot cause turbulence

 

In Peking University Professor Xiao Zhuoji’s opinion, the income gap will not cause too much trouble and society has a whole will maintain its stability and prosperity, even though the Gini coefficient has reached its warning limit.

 

Firstly, the Chinese economy is growing faster than ever and this ascending trend shows no sign of slowing. Secondly, the government has laid out many policies ensuring social stability and a better life for all, such as aid for people living in poverty; living allowances and redundancy insurance. China’s goal is to build a comfortable, well-off society in every way and the government is taking active measures to realize this. More money has been invested in education, improvements have been seen in public health and more jobs have been created. All of these factors give people hope that soon, further troubles such as the income gap will be nothing but history.

 

(China.org.cn by Wang Ke, August 13, 2006)