Chongqing targets income gap

By An Baijie Source:Global Times Published: 2011-1-11 17:49:00

Chongqing Municipality has introduced the concept of the Gini coefficient into its 12th Five-Year Plan (2011-15) in a groundbreaking move for a local government.

It displays the authority's determination to narrow the growing income gap, a task that will be difficult to achieve in five years, observers say.

Huang Qifan, mayor of Chongqing, said at the local People's Congress session on Sunday that the local government is aiming to lower the local Gini coefficient from the current 0.42 to 0.35 by 2015.

The Gini coefficient, an international measurement developed by the Italian statistician Corrado Gini, uses zero to indicate equal income distribution while 1 represents the largest income disparity.

World Bank figures show that China's Gini coefficient has remained above the inter-nationally recognized warning line of 0.4 since 2000. The Bureau of Statistics stopped releasing the official figure after it hit 0.47 in 2004. Many scholars estimate that it is currently at about 0.49.

Su Hainan, vice president of the China Association for Labor Studies, hailed Chongqing's attempt to tackle the problem of income disparity, saying that the local government has put it at the top of its agenda.

"The income gap has nothing to do with economic development, social wealth or productivity," Huang said. "The key lies in the system of distribution."

According to Huang, there will be five aspects to the reform - increasing incomes, supporting the poor while regulating the rich, imposing property tax, boosting em-ployment and ensuring equal education opportunities in both rural and urban areas.

According to the Chongqing Daily, local officials noted at a conference on economic work last month that per capita GDP and per capita income figures conceal the huge discrepancy in income distribution and cannot reflect the income gap of a well-off society.

Deng Weizhi, a professor of sociology at Shanghai University, told the newspaper that it was a sign of great progress for Chongqing to realize that average GDP was merely a "data trick."

Deng argued that the government should play a leading role in improving people's livelihoods, an effort that the market and social organizations should also contribute to.

"The market would never believe in tears, but the government should. When the income gap expands, the government should step up to balance it," Deng said.

Su noted that regulating high-income groups is as important as helping low-income earners, suggesting that imposing heavy taxes on wealthy people's speculative incomes, cracking down on illegal in-comes, regulating the gray income and curbing the high salaries of senior managers in State-owned enterprises are all necessary measures.

However, Su still expressed skepticism over Chongqing's target of lowering the Gini coefficient by 0.07 in five years.

"Judging from the current situation, it's possible that the Gini coefficient may keep increasing in the future," Su warned.

Posted in: China Watch

blog comments powered by Disqus