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China to Tackle Yawning Wealth Gap by Hiking Minimum Wage

Data Analysis 08:44:07AM Jun 12, 2010 Source:SMM

BEIJING, Jun. 12 -- With four major cities and provinces increasing their minimum monthly wage to more than 1,000 yuan ($147), China is restructuring its national income distributions to ensure a more equitable distribution of income to help create a more stable society.

The government of Shenzhen city in south China's Guangdong province announced on Wednesday that the minimum monthly wage in the country's first special economic zone has been raised to 1,100 yuan.

Earlier, the governments of the Shanghai municipality, Guangdong and Zhejiang provinces also announced they were increasing the minimum monthly wage to more than 1,000 yuan.

To decree a minimum monthly wage has been one of the few options for the Chinese government to intervene in the primary distribution of the nation's income after the country began its market-oriented economic reform in the late 1970s.

Further, on the same day that the Shenzhen city government announced its new minimum monthly wage standard, the State Administration of Taxation issued a new regulation to strengthen inspection and supervision of high-income taxpayers.

"These measures have been taken on the same target, that is, to reverse the current situation of an irrational social wealth distribution and yawning gap between the rich and poor," Hu Angang, a prominent scholar at Tsinghua University, told Xinhua on Thursday.

"The raising up of the minimum wage is restructuring the primary distribution and the tightened inspection on high-income taxpayers to aid in the redistribution of the national income," Hu said.

Raising the minimum monthly wage has become an increasing trend since the beginning of the year when the government of Jiangsu, China's richest province in 2009 GDP rankings, announced the first wage hike.

So far, more than 10 provinces, autonomous regions and municipalities have also raised their minimum monthly wage standards. The new standard for Beijing is 960 yuan.

In line with the policy "to make some people get rich first" initiated by the late leader Deng Xiaoping, China's economy has witnessed amazing booms but also faced an increasing disparity of incomes.

China's Gini coefficient, which is widely used to evaluate a country's gap in wealth, has risen from around 0.3 in the early 1980s and exceeded the warning line of 0.4 in 2000. By 2010 it had reached 0.48.

Further, there has developed a consensus among China's scholars that a rational and fair distribution of national income will help stabilize and maintain a harmonious society.

Also, the restructuring of the national income distribution has increasingly gained the attention of Chinese leaders. President Hu Jintao said earlier this year that the government must increase common residents' incomes and move towards a more consumer-led economic growth.

Premier Wen Jiabao also mentioned, in his government work report to the country's top legislature and in an exclusive interview with Xinhua, that reforms on national income distribution must be enacted.

Since there are few options for the government to adjust the primary distribution of national income, experts have suggested that more employment opportunities should be created for low-income citizens.

"The government should make out policies to encourage the development of the service industry which could provide more jobs and constantly raise minimum wage," Hu said.

Another measure that the government should take is to increase the amount of middle-income citizens so as to make the middle class stronger, Hu added.

 

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China to Tackle Yawning Wealth Gap by Hiking Minimum Wage

Data Analysis 08:44:07AM Jun 12, 2010 Source:SMM

BEIJING, Jun. 12 -- With four major cities and provinces increasing their minimum monthly wage to more than 1,000 yuan ($147), China is restructuring its national income distributions to ensure a more equitable distribution of income to help create a more stable society.

The government of Shenzhen city in south China's Guangdong province announced on Wednesday that the minimum monthly wage in the country's first special economic zone has been raised to 1,100 yuan.

Earlier, the governments of the Shanghai municipality, Guangdong and Zhejiang provinces also announced they were increasing the minimum monthly wage to more than 1,000 yuan.

To decree a minimum monthly wage has been one of the few options for the Chinese government to intervene in the primary distribution of the nation's income after the country began its market-oriented economic reform in the late 1970s.

Further, on the same day that the Shenzhen city government announced its new minimum monthly wage standard, the State Administration of Taxation issued a new regulation to strengthen inspection and supervision of high-income taxpayers.

"These measures have been taken on the same target, that is, to reverse the current situation of an irrational social wealth distribution and yawning gap between the rich and poor," Hu Angang, a prominent scholar at Tsinghua University, told Xinhua on Thursday.

"The raising up of the minimum wage is restructuring the primary distribution and the tightened inspection on high-income taxpayers to aid in the redistribution of the national income," Hu said.

Raising the minimum monthly wage has become an increasing trend since the beginning of the year when the government of Jiangsu, China's richest province in 2009 GDP rankings, announced the first wage hike.

So far, more than 10 provinces, autonomous regions and municipalities have also raised their minimum monthly wage standards. The new standard for Beijing is 960 yuan.

In line with the policy "to make some people get rich first" initiated by the late leader Deng Xiaoping, China's economy has witnessed amazing booms but also faced an increasing disparity of incomes.

China's Gini coefficient, which is widely used to evaluate a country's gap in wealth, has risen from around 0.3 in the early 1980s and exceeded the warning line of 0.4 in 2000. By 2010 it had reached 0.48.

Further, there has developed a consensus among China's scholars that a rational and fair distribution of national income will help stabilize and maintain a harmonious society.

Also, the restructuring of the national income distribution has increasingly gained the attention of Chinese leaders. President Hu Jintao said earlier this year that the government must increase common residents' incomes and move towards a more consumer-led economic growth.

Premier Wen Jiabao also mentioned, in his government work report to the country's top legislature and in an exclusive interview with Xinhua, that reforms on national income distribution must be enacted.

Since there are few options for the government to adjust the primary distribution of national income, experts have suggested that more employment opportunities should be created for low-income citizens.

"The government should make out policies to encourage the development of the service industry which could provide more jobs and constantly raise minimum wage," Hu said.

Another measure that the government should take is to increase the amount of middle-income citizens so as to make the middle class stronger, Hu added.