Rush for growth root of China's wealth gap
- Source: Global Times
- [22:43 March 04 2010]
- Comments
GT: At the local “two sessions” this year, some local governments in Henan, Hunan and Shanghai set their GDP growth rate targets lower than for 2009. Why?
Cai: Some reports revealed that one of the big dissatisfactions comes from the growth rate of salary. The growth rate of GDP is much higher than that of the average salary in many places.
To slow down and put less emphasis on GDP growth is a wise decision. In Hunan Province, the government is aiming to keep the growth rates of GDP and salaries on the same level.
In Henan Province, the government put improving farmers' livelihood as the No.1 goal.
To set the GDP growth rate lower than the current rates takes some courage. It shows the government's determination to put people's interest first, not the government's. These are very brave and admirable decisions.
Why? Because the higher the GDP growth rate, and the more money the government could get from tax, the better performance record they will have.
It will work too. If the salary increase only happens to the rich, the money will probably be used for investment. While if the poor get more money, they will use it on consumption, since at the moment they don't have anything, even quite basic goods. Whatever way it works out, consumption or investment, it wil be good for the economy. So it looks painful, but it works both ways.
GT: Apart from the income distribution system, some netizens voted that improving the fairness of the social insurance should be the most important task for the government. How could the government fulfill this goal?
Cai: We pay a certain amount of money every month as social insurance. The money we pay is not saved for us for the future. It is used to cover pensions and unemployment benefit at the moment, ensuring that old people and people without jobs can still survive.
People think that government officials and people working for State-owned enterprises have better social insurance than people from private companies.
I think the problem is not that the government officials or State-owned employees have too good a system, but that some private companies need to offer better insurance package to their employees.
