High hopes on CPC for fairer incomes

Liu Mengmeng has been working as a piler operator in a glass factory in east China's Shandong Province for two years since graduation from a technical school, but she can hardly make ends meet.

The private firm pays 1,700 yuan (271 U.S. dollars) each month to migrant workers like her. In comparison, at nearby Yankuang Group Co., a state-owned coal mine, employees are provided with generous job benefits in addition to a 5,000-yuan monthly salary.

It is such contrasts that have made income inequality a top public complaint in China, the world's fastest-growing economy in the past three decades fueled by rapid industrialization and urbanization.

After repeated delays to an income distribution reform plan that has been under government consideration since 2004, people are expecting more radical efforts in this regard from the new Communist Party of China (CPC) leadership elected last November.

"I hope that the leadership can adopt a higher viewpoint when outlining the reform, and it can cap high incomes in monopolized sectors," said Wu Li from a Beijing-based private PC company.

Wu currently earns 8,000 yuan a month, up from 6,000 yuan in 2010, but she still feels stressed because the rent for an apartment she shares with her roommate increased by 1,500 yuan in the period.

"I hope that the country can push harder on the reform, and solve the twin-track pension system," said Lu Meixiang, a worker in a textile plant in Shandong. The 47-year-old woman is upset about the big disparity in pensions between retirees from companies and government-affiliated institutions.

Prosperity brought by China's reform and opening up since the late 1970s has animated state-dominated industries and eastern regions. The Hukou registration system, which classifies residents into farmers and non-farmers, also helped enlarge the wealth gap.

Official data show that China's Gini coefficient, a widely used measure of economic inequality, has stayed between 0.47 and 0.49 during the past decade, well above the 0.4 warning level set by the United Nations.

Income gaps can reach multiples in the thousands in extreme cases. In 2007, some managers of state-owned enterprises earned 4,553 times more than migrant workers, according to a 2011 report from the Ministry of Human Resources and Social Security.

The government has resorted to measures such as raising minimum wages and livelihood allowances to alleviate the pressure on low-income groups and expand the middle class, but the efforts have been impaired by surging consumer prices and skyrocketing housing prices.

Judging from the handsome salary and three homes enjoyed by Zhang Shun in Beijing, it is obvious that the private firm manager doesn't struggle to save. The middle-age man said that he feels safe to save every penny as he needs to care for his aging parents and support his soon-to-be-married son.

"The lion's share of the country's wealth is taken by a minority of the population. Reform is urgently needed both for the need to guarantee equity and the purpose of boosting domestic consumption," Zhang said.

"The idea of 'getting some people rich first' was raised by late Chinese leader Deng Xiaoping. It's the right path, but lagging political reforms have caused income inequality," according to Huang Zongliang, a Peking University politics professor.

The CPC has kept sober-minded about the issue, but great obstacles are ahead if the new leadership wants to reconstruct the established structure of social interests, Huang said, citing difficulties in reforming state-owned sectors and regulating officials' illegal incomes.

Because of this, the reform is a gigantic project, requiring a whole range of coordinated measures relating to administration, finance and taxation, social security, employment, and the Hukou system, economists maintain.

Meanwhile, the government needs to regulate income distribution through legal and economic means, while boosting the role of the market in the primary distribution of national income, the main source of residential incomes, according to Chang Xiuze, an renowned Chinese economist.

"The government should seek a balance between market competition and fairness, learning to 'dance on the two eggs.' Otherwise it will lead either to social retrogression or upheaval," Chang said.

China's gross domestic product (GDP) reached 51.93 trillion yuan last year, ensuring the country kept its place as the world's second-largest economy. Consumption contributed 51.8 percent of the GDP growth in 2012, but that measure was still low compared to developed economies due to residents' reluctance to spend.

The government urged the completion of the income distribution reform plan on several occasions last year. The CPC also announced a goal to double China's GDP and residents' per capita income by 2020 from 2010 levels at a national congress in November.