The government has eventually admitted that the wealth disparity between China's rich and poor populations has reached an unreasonably large extent.

Talk about unfair distribution of income has been prevalent in recent years but the official acknowledgement by the most authoritative central government department has been rare and thus is phenomenal.

The National Development and Reform Commission early last week released a report stating that the Gini coefficient, an international measure for income inequality within a given population, had reached 0.4 in China, "the upper limit of the index's reasonable value range."

The news has triggered ardent debates. Arguments centre around the relationship between efficiency and fairness during China's economic reform. They mainly fall into two categories. While both acknowledge the seriousness of the problem, one side argues inequality is unavoidable if efficiency is to be achieved; the other side emphasizes that now it is time to place fairness above efficiency.

I think both sides are wrong in pitting efficiency and fairness against each other. Efficiency and fairness are not intrinsically opposite to each other. They can co-exist if their relationship is properly handled.

Fairness in income distribution does not mean egalitarianism. Lowering the income of the rich population is not the right way to narrow the gap.

In fact, the huge gap of income disparity in China is not the outcome of the efficiency-oriented economic reform but rather the result of illegal means taken by some rich people in their avaricious moves to grab social wealth.

Most of the richest people in China used irregular methods to accomplish the primitive accumulation of their personal wealth. "Accumulation" is perhaps not the right word to describe the growth of their wealth as it usually connotes a gradual process. "Rocketing" is probably more accurate, because many of them hit their gold mine nearly overnight.

The most illustrative examples happened in the "reform of state-owned enterprises." People with official backgrounds turned state-owned property into their private property at very low cost (or even at zero cost in some cases) while the workers who had been "masters of the country" under socialism were deprived of their say during the process.

There were other forms of robbery of state-owned property in the name of "exercising market economy." For instance, the profits of China's real estate industry are notoriously high but the developers' franchise of land was usually clinched at unbelievably low prices.

Many private entrepreneurs accumulated their wealth by paying very low wages to labourers and forcing them to work overtime.

This unethical behavior should not be regarded as normal in a market economy. In fact, developed capitalist countries have their laws to crack down on unfair competition and management irregularities.

After having experienced more than 20 years of reform, the majority of Chinese people now do not resent income inequality. What they complain about is the unequal opportunity caused by illegal means or crimes.

Narrowing the gap between the rich and the poor is certainly an important move in "building a harmonious society," but what is most urgent is not artificially lowering the income of the rich population. Instead, effective moves should be taken to crack down on all economic crimes. And those who have gathered a huge amount of wealth in a very short time should be held accountable for the source of their income. The government should take a serious attitude in this regard.

(China Daily February 15, 2006)