HAIKOU - Senior researchers have proposed measures for income distribution reform in China's 12th Five-Year Plan (2011-2015) to increase residents' income and narrow the nation's widening wealth gap.( s- x/ ~8 x. _4 m1 Q$ \6 H2 \2 e
Su Hainan, an expert from the Ministry of Human Resources and Social Security, said the amount of residents' income in the GDP should increase by 4 to 5 percentage points in the next five years.
; ^: n( k7 ]* f& X While China's GDP growth skyrocketed at double digits over the past two decades, the amount of residents' income in the national GDP has been falling.) ^- c6 u7 h. N5 k9 j" W
Residents' income accounted for 53.4 percent of GDP in 1990, while the figure fell to 39.7 percent in 2007, according to data from China Society of Economic Reform.
; H3 _9 ?0 U" T. W0 {9 b China must first raise residents' income, instead of expanding the size of the economy, to keep the world's second-largest economy from faltering, said Chi Fulin, director of the China Institute for Reform and Development based in Haikou, capital of Hainan province.* \9 Y# }1 m4 u& z5 l
"The annual growth rate of residents' income should not be lower than 8 percent in the next five years, so as to be in step with the GDP growth rate." he said.
8 o2 j7 p# @, e) z, e4 ` These experts participated in a discussion of income distribution organized by the National Development and Reform Commission and have already submitted proposals to the leadership for review.: B3 \5 e+ ?% z! H6 [8 r
The commission is working on a detailed proposal on distributional reform, and the full details will be revealed in March, Su said.
" j! B- ~1 ?( C* f' O) _ Income distribution reform is a central issue in China's 12th Five-Year Plan, the draft of which was discussed at the Fifth Plenary Session of the 17th Communist Party of China (CPC) Central Committee in October.
) Y$ _2 X# P. I2 U) i7 d The CPC Central Committee said after a four-day meeting that in the five-year plan China will focus on stimulating domestic demand by raising residents' income.
- I+ G( \- B O7 j Economists said narrowing income disparities was also a challenging task that should be listed in the plan.2 s+ w; [$ r o
China has one of the greatest wealth disparities in the world, with the richest 10 percent earning 65 times the average income of the poorest 10 percent, according to a study sponsored by Credit Suisse. A survey conducted by the Ministry of Finance in 2009 also found that the richest 10 percent of families own 45 percent of the total wealth of all urban residents.; T9 p. `- t4 Z; Y+ c; r' t" _5 b/ L% B6 U
Su said the income ratio between urban and rural residents reached 3.3:1, and it needs to be 3:1 in the next five years, while the income ratio between richest and poorest industries has risen to 15:1, and should be capped at 8:1. w5 j- _+ _- {0 T! E# F
The income of senior staff members in State-owned enterprises (SOEs) is 128 times higher than the national average, he said.4 T8 A3 G" z: g6 f) J+ p
"Industrial monopolies, which may get access to crucial resources at low cost, earn significant profits for their employees. SOEs should pay a higher level of dividends to adjust income distribution," said Song Xiaowu, president of China Society of Economic Reform.
/ o- l [2 M8 P' A( o% }0 j SOEs in other countries pay an average of 33 percent of profits as dividends to their governments while Chinese SOEs only pay 5 or 10 percent, according to a World Bank research report.- K, P& M, c4 x" y, {
|