The income gap among Chinese residents has been worsening since the year of 2003 and has reached the "yellow light" alarm level. Should there be no effective measures, it will reach the dangerous "red light" level in five years.

Study Times, a journal sponsored by the Party School of the Central Committee of the Communist Party of China recently carried an article warning against China's increasingly serious wealth gap, International Finance News reports.

Statistics from the United Nations Development Program show that Gini Coefficient, a statistical measure of inequality in which zero expresses complete equality while one expresses complete inequality, is 0.45 in China and 20 percent of China's population at the poverty end accounts for only 4.7 percent of the total income or consumption; 20 percent of China's population at the affluence end accounts for 50 percent of the total income or consumption.

The article points out a majority opinion is that the serious wealth gap in China has broken the reasonable limit (the internationally recognized alarm level of Gini Coefficient is 0.4), and shows a tendency of widening. In the long run, not only will it be hard for common prosperity to be materialized but also will there likely be various destabilizing social phenomena. What is particularly worth of people's attention is that the transition period from per capita GDP of US$1, 000 to US$3,000 is a period when there apt to emerge increasing social conflicts. China is now just in this stage.

The article proposes not to rush to re-define the relationship between efficiency and equity but pay attention to how to really ensure equity on the basis of "prioritizing efficiency".

The article says the rich population consists of private business owners that got rich due to their talent and diligence as well as people who gained wealth through collusion with officials in power-for-money deals or because they happen to work in monopoly companies or because they stole state assets.

Chinese economist Wu Jinglian said "inequality of opportunity" is the root cause of the income gap.

The article adds, recently, the Standing Committee of the National People's Congress (NPC) initiated the legislation process of the revising the benchmark of personal income tax, which is a positive signal indicating that the country has noticed the "incapability" and "negative effects" of some outdated legislation and policies in adjusting income difference. However, a lot of work is before the government, especially in pushing forward in an orderly way the reform of property rights of state assets, breaking various monopolies that have formed on administrative orders and putting in place and improve social security, etc.

The article stresses that it is a one-sided opinion to blame market-oriented reform for the income gap and such a view must be corrected.

By People's Daily Online