Income Distribution Reform Progressing in China

In his government work report, Premier Wen Jiabao has said he intends to enhance rational income distribution system in China.

As complaints about Chinese residents' low incomes grow, many delegates at the ongoing session of China's top lawmaking body have raised proposals or suggestions on income distribution reform. Li Ningjing has more.

For people whose hometown is not Beijing, working and living in this big city on their limited salaries is not easy. Jiang Hui is one of them. As a bank clerk whose salary is about 5,000 yuan a month, she said it is impossible to buy a house without help from her parents.

"Even if I only spend 2,000 yuan a month, then I can save 36,000 yuan a year. It will still take me ten years to save enough for just the down payment."

Jiang says that current salaries make it too difficult to enjoy life in Beijing. She wishes for a noticeable rise in her salary.

Wang Yun, an employee at a state-owned enterprise, hopes his contributions can be fully reflected in his salary.

"Our current salaries and what we contribute don't match. Although we create a lot of wealth, what we earn is not high."

Zong Qinghou, owner of beverage maker Wahaha Group, suggests raising the threshold for personal income taxes from the current 2,000 yuan to 5,000 yuan to raise the incomes of medium income earners.

"Medium income earners want to buy cars and houses, but cannot afford them with their current salaries. If the threshold for personal income taxes is raised, they can have more money to consume. The economic growth boosted by consuming may even increase the country's tax revenue."

In addition to suggestions on increasing salaries, experts say policies that adjust the secondary distribution of income will also effectively narrow the income gap.

Zheng Gongcheng, a professor from Renmin University of China, says the government made effective social security policies last year, such as increasing investment into endowments and medical insurances. These measures amount to raising the incomes of affected groups.

He believes there must be further adjustment to the fiscal expenditure structure and more investments in improving people's living standards.

"If we transfer more fiscal investment from inefficient sectors toward improving people's living standards, it will be very useful in narrowing the income gap. For example, if all farmers can benefit from endowment insurance, the effect is similar to raising their income."

Chinese Finance Minister Xie Xuren confirmed the government plans to invest more funding in public sectors. And it will also increase the income of the country's citizens, thereby narrowing the income gap between people from different social groups.

Li Ningjing, CRI News.