Action needed to narrow wealth gap - Zhang Juwei

Zhang Juwei

The wealth gap in China, reflected in the gini coefficient, is moving into dangerous heights, and government action is needed to narrow to divide between rich and poor, says professor Zhang Juwei, director of the labor and social security research center at the Chinese Academy of Social Sciences to the China Daily.

The China Daily:

The Gini coefficient - a measure of income inequality commonly used by economists and institutions - reached 0.47 in China in 2005, overtaking the recognized warning level of 0.4, according to the World Bank. 

Although no new calculation has been released to gauge the latest situation of income inequality in China, the previous World Bank figure basically represents the nation's current situation and the gap is widening dramatically, said Zhang Juwei, professor and director of the labor and social security research center at the Chinese Academy of Social Sciences. 

Zhou Tianyong, senior economist of the Party School of the Central Committee of the Communist Party of China, said in a recent article that in 2008, the Gini coefficient was 0.47 in China. 

"When the Gini coefficient reaches around 0.5, it means the inequality problem is extremely severe and needs immediate action to bring it down," Zhang said... 

As for solutions, analysts are divided on where the strongest measures should be taken. Zhang said the emphasis should be placed on the primary distribution of national income. "It is the root of the income distribution system. The government should do more to raise the proportion of laborers' incomes in the income basket, which has been declining for years," he said, adding that capital investment has been a major reason for the disproportionately high ratio of wealth held by the rich. 

He said raising farmers' incomes is a practical measure and by doing that, the salaries of low-income groups like migrant workers would also go up.

More at the China Daily.

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