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Getting a fair slice of China's economic cake
    March 01,2011



BEIJING - Chinese Premier Wen Jiabao on Sunday tackled the country's yawning wealth gap, comparing economic development to a cake that had to be bigger and more fairly divided.

"Ensuring fair income distribution will be an important task of the government in the next five years," Wen said during an online chat with the public, the third of its kind since 2009, prior to the national parliamentary session early next month.

"Income distribution has a direct bearing on social justice and fairness as well as stability," he said.

Despite remarkable economic progress, China has several social problems, including a widening wealth gap and slow increase in incomes. The situation has resulted in social conflict in some areas.

According to a World Bank report, the Gini coefficient for China surged to 0.47 in 2009, pointing to an unequal distribution of income that could lead to social unrest. On the Gini coefficient, 0.4 is regainequalityrded as the threshold of serious inequality.

"As I have always said, we shall not only make the cake bigger, but also divide it fairly, so that everyone can enjoy the fruits of reform and opening up. We will strive for it," Wen said.

While Wen made the pledge in downtown Beijing, Lin Derong, a 35-year-old farmer on the outskirts of southwestern Chengdu city, was still uncertain about paying his social insurance premiums.

"I want to pay, but it costs 1,000 yuan ($152) every year, which is too much for me," Lin said. "I hope for more favorable insurance conditions and lower premiums."

Lin said he hoped to see social insurance discussed at the upcoming annual parliamentary and political advisory sessions, often dubbed as "two sessions" in China.

He also wanted national legislators and political advisors to focus more on living standards at their annual sessions.

The country's development plan for the next five years is expected to be endorsed at the two sessions. According to the Communist Party of China (CPC) Central Committee's proposed plan, the government will try to make incomes rise in line with economic development, and wage increases keep pace with improvements in productivity.

The proposal indicated a shift in focus to social fairness from the efficiency-oriented development mode launched in the reform and opening-up drive in 1978, the commentators said.

Official statistics show that at the beginning of China's reform and opening, incomes accounted for more than half of the primary distribution of national income, but they presently comprise less than 40 percent.

Southwest China's Sichuan province devoted 60 percent of its government budget to improving living standards last year. The allocation will increase by 11.7 percent to 84 billion yuan this year.

Chongqing municipality was the country's first provincial-level area to reveal its Gini coefficient rating, the internationally recognized wealth distribution index.

The municipal government vowed to reduce the index from the current 0.42 to 0.35 in the next five years.

The provinces of Shandong and Zhejiang have pledged to give priority to living standards and other provinces have plan to double minimum wages in the next five years in moves heralding the five-year development plan.

Yang Qingyu, a national legislator and economic planning official of Chongqing, said income disparity was most prominent between urban and rural residents, and the pressing task was the reallocation of incomes.

Yang said Chongqing would mainly focus on increasing incomes in rural areas and improving minimum living standards in the next five years.

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