How to Double China's Per-capita Income

Gao Huiqing, Director from the Economic Forecast Department of China State Information Center.	Yang Zhiyong, researcher from National Academy of Economic Strategy, CASS.	Zhang Monan, researcher from the Economic Forecast Department of China State Information Center.

Three researchers working for China's top think tanks were interviewed yesterday by The Beijing News to elaborate on ways to realize the target set by the Communist Party of China (CPC) to double China's per-capita income during the country's next generation of leadership, who will be named as the 18th National Congress of the CPC comes to an end later this week.

The Chinese mainland aims to double its per-capita income level by 2020, President Hu Jintao said in his remarks at the opening of the National Congress last Thursday, thus setting the benchmark for China's new generation of leaders.

China's National Bureau of Statistics data shows that in 2010, China's urban resident per capita disposable income was 19,109 yuan (US$3,033), and rural per capita net income was 5,919 yuan (US$940).

China is currently facing a period of economic structural adjustment as it grapples with how to reduce the income gap between the rich and poor, how to raise per-capita income, and how to reduce the costs of reform. Economic policy experts explore ways that China could achieve these ends:

1. Increasing per-capita income: state-owned enterprises can be the first to share their profits with public coffers

Gao Huiqing, Director from the Economic Forecast Department of the China State Information Center, elaborates his solutions to achieve the per-capita income target.

First, China's economy must maintain a certain speed of growth; second, the income distribution should incline to raise grassroots income.

Gao said in an interview that the reform of income distribution is a systematic project. For some sectors, such as state-owned enterprises, the conditions are ripe and immediate action could be taken first —profit of SOEs to can be used in state finance to raise the overall level of China's social security system.

Zhang Monan, a researcher also from the Economic Forecasting Department of China State Information Center, said China state finance should transfer more funds into education and health care to establish a long-term base to raise per-capita incomes. In addition, reform measures should be taken to break the existing practice of "unequal pay for equal work" because of SOE monopolies, so that small and medium enterprises and state-owned enterprises compete from the same starting line. Listed companies should be required to share their profits with the shareholders to ensure the public receives income from securities investments.

2. Narrowing the income gap: the priority is to increase the income of less privileged people and expand the middle class

As china works towards doubling per-capita income, how can it avoid widening the already large income gap between the rich and poor? Yang Zhiyong, researcher from the Chinese Academy of Social Sciences, gave his opinions on this issue. First, society should admit that a certain income gap is reasonable as China continues to develop. The government's focus is to protect the interests of low-income persons, ensuring the rise of their living standards; at the same time, we should have different views for high-income earners. In terms of curbing the wealth acquired by monopolies and corruption, we need to improve the system. More importantly, the government should provide an equal competition environment in the process of adjusting income distribution.

Gao Huiqing said that the first priority for narrowing the income gap lies in strengthening the building of legal system. Secondly, the country should pursue more open and transparent government operations, including more transparency in the property records of officials. Third, China should further reduce government intervention in the market, and obtain a stable relationship between the government and the market.

On the issue of secondary distribution, Zhang Monan claimed that potential increases in residents' property income is greater than increases in wage income, which helps resolve the problem of an excessive wealth gap. Fiscal policies such as increasing residents' financial investment channels and redistribution by imposing property taxes could be taken.