Watch VideoPlay Video
Wider distribution of China's wealth
In the new Five-Year Plan, the government is trying to narrow the income gap by increasing the low, stabilizing the middle, and curbing the high. But it's much more than that.
As China continues its rapid economic development, it also wants to share more benefits with its people.
Why this particular topic has become a priority?
In general terms, the plan aims to embrace what the government calls an "inclusive growth" strategy, which is a new idea on ensuring equal access to opportunities for people, while balancing economic and social development. As for the income distribution part, it means sharing more wealth.
While wages accounted for more than 56 percent of the nation's GDP in 1983, for example, this figure dropped to just under 37 percent by 2007. That means the increase in GDP has not increased the wealth of individual households.
It will be a different and happier story, if the country distributes more wealth to the people who powered its economic development. So the decision makers are trying to shift the basic concept from one of a strong nation, to one of a rich people. Another focus on income distribution is narrowing the gap.
The World Bank estimates the number of China's Gini Coefficient, which is a main gauge of income disparity, had surged to 0.47 in 2009, exceeding the warning line of 0.4. Three decades ago, it was below 0.22.
The widening income gap continues to be a serious socio-economic problem. It has also become a target in the debate on equality and justice. In the new plan authorities have realized that, while reforming the income distribution system, it's not just about how to make the cake bigger, but also how to cut it more fairly.
Keys to bridging national income gap
China is, indeed, entering a difficult period of reform. While trying to boost the income of the poor, it may turn out that the income of the rich increases even faster. As society becomes more diversified, it's hard to come up with a policy that satisfies everyone.
For example, breaking up monopolies is one key to closing the income gap. The monthly salary for an average employee in telecommunications and natural resources could be up 10 times more that of those in the private sector, most of whom earn about three-thousand yuan per month.
The result has been public complaints, and millions of college graduates seeking jobs at state-owned monopolies, for better health care insurance and more stable incomes. Authorities are considering putting a cap on the total amount of salaries at these enterprises.
But that could mean these companies will end up losing talent. And of course, income redistribution is not all that's needed to help people deal with higher living costs. A better social insurance network, and an improved welfare system, could also help bridge the income gap.