[By Jiao Haiyang/China.org.cn]

The widening wealth gap is the focus of great public concern in China at present. It is crucial that the causes of the problem are identified so that an effective solution can be found.

Many people think that the wealth gap exists due to "rich state, poor people." Simply put, this means that tax revenue and the salaries of workers in state owned enterprises (SOEs) are too high. Therefore, other parts in national income remain low. This might seem reasonable, but it is not true.

In 2010, Jia Kang, director of the Fiscal Science Research Institute of the Ministry of Finance pointed out a number of pertinent factors:

• From 1996 to 2007, the percentage of resident income in the distribution of national income dropped from 69.3 to 57.5, a fall of 11.8 percent. Meanwhile, the percentage of enterprise profits grew from 21.2 to 31.3.

• As a major income resource, salary remains low, percentage-wise, in the distribution of production factors. It accounts for less than 10 percent of enterprise operation costs, much lower than the 50 percent figure in developed countries.

• Resident income has grown rapidly in recent years, but enterprise profit growth has been even more rapid. However, government revenue has fallen, bottoming out at 10.3 percent in 1995 from more than 30 percent at the beginning of China's reform and opening up. Later, government revenue saw a gradual recovery and returned to growth. However, part of the government's revenue goes to support those in low-income brackets.

Mr. Jia's summary is a concise analysis of the current situation. So the reality in China is not "rich state, poor people." Instead, there exists a contradiction between the high profits of private enterprises and the low income of the working class. Therefore, a more correct phrase would be "rich boss, poor workers." And this is the reason for the widening of the gap between the rich and the poor. The past thirty years have witnessed the high-speed development of China's economy and the rapid growth of enterprise profits. The overwhelming success of Chinese companies in the global marketplace is built on cheap, qualified laborers. "Work hard, earn little" could, therefore, be the motto of China's workforce. Now China has updated its industries from manufacturing shirts and toys to advanced technical and mechanical products. But the income of laborers still remains low. Unfortunately, many people ignore this reality, overstating the so- called theory of "rich state, poor people." As a result,, criticizing SOEs has become a trend of today's China.

For example, in July, 2011, Zhang Meiying, the first vice-chairwoman of the Central Committee of the China Democratic League (CDL) criticized SOEs in an interview with China Economic Weekly. She asked SOEs:"As the eldest son of a big family, have you ever taken care of the poorer members of your family? Have you taken the problems which face migrant workers into consideration?" I do admire Ms Zhang's concern for the poor. But I fail to understand why she places the blame squarely on SOEs.

Ms Zhang, please, can you tell me who is directly responsible for the plight of the poor and of migrant workers? The answer is, of course, their bosses. Workers' poverty is caused by low salaries. It's so obvious that even a child could understand it. Why don't you ask bosses to raise workers' salaries instead of blaming SOEs?

After a long-term economic restructure, private enterprises now account for more than half of the national economy. And laborers working for them have already surpassed 50 percent of the entire workforce. In contrast, SOEs, once the bedrock of the national economy, have been gradually shrinking. Their workers now account for less than 10 percent of the workforce. Therefore, bosses of private enterprises, not the staff of SOEs, should shoulder much of the responsibility for narrowing the wealth gap. After 13 of his workers committed suicide, Foxconn Chairman Terry Gou did not blame SOEs such as Baosteel Group Corporation and Sinopec (China Petrochemical Corporation). And a young PwC employee's death as a result of overworking cannot be the fault of either the Ministry of Railways or the National Development and Reform Committee.

Some have complained that SOEs' workers earn more money than those doing the same jobs in private companies. So, why not ask the bosses of private companies to raise salaries to match those paid by SOEs?

Of course, I do not mean that SOEs are beyond criticism. In fact, they have serious problems. For example, some SOEs hire dispatching workers without signing labor contracts with them. But, making a general statement that SOEs employees' income is too high is simplistic and inaccurate.

The author is a writer and commentator in Beijing.

(This article was written in Chinese and translated by Li Shen.)

Opinion articles reflect the views of their authors, not necessarily those of China.org.cn

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