Addressing China's Inequalities

Dr. Sen Gong, of the Development Research Centre of the State Council, wrote a five-section report, “Inequality in China: A Case Study”, with Associate Professor Bingqi Li, from Australian National University, and Save the Children UK, helping to address the root causes of inequality in opportunity and outcomes, as China seeks to pave the way for sustainable economic growth and social development.

Addressing Inequalities in Opportunity as well as Outcomes (Section 5 Cont.)

China should shift its development priorities from fighting poverty to enabling all members of society to participate in and contribute to growth on an equal footing, regardless of their individual circumstances or background. This strategy should aim to achieve these four objectives.

First, to improve market mechanisms to maximize economic opportunities:

Both price distortions and public sector monopolies should be reduced or even eliminated. This could encourage more effective use of capital and labor and fair competition.

Second, to promote equal access to and pursuit of economic opportunities:

Investing in early childhood development and nutrition programmes yields strong economic returns and improves productivity. Actions need to promote “equality of quality” in compulsory education, extend affordable access to post-compulsory education, accelerate health sector reforms improving provider incentives, and rebuilding the primary care system as the basis of a coordinated healthcare system. There should also be equal pay for the same work between men and women, contract and dispatched workers, and migrant and local workers.

Public service providers should have the right incentives so that they can uphold professional ethics and deliver good-quality, timely services to target populations. Citizens’ participation in the delivery and monitoring of social services should be enhanced, as well as the role of non-state sector as service providers. It is important to promote transparency in public sector recruitment to encourage equal access to sought-after jobs.

Third, to consolidate the basic social floor:

A social protection system needs to ensure effective incentives to work and offer social protection for the poor or those who are unable to take up work. The responsibilities of central and local government in the provision of public services need to be more clearly defined, and fiscal transfers from central government need to be increased to ensure the smooth provision of essential universal services.

Fourth, to regulate high incomes through personal income tax and a tax on household assets:

It is necessary to improve the capacity of individual income tax to narrow the income gap, to introduce taxation on property and rental income, and to use estimated housing value to calculate the tax rate on housing property. This would require the government to improve its capacity to obtain information on household incomes and wealth, which would also help fight against corruption.

In conclusion, alongside the need for these national strategies, the international community must also work together to govern the flow of capital and highly skilled professionals to help ensure that the process of globalization is fairer and more sustainable. By expanding development strategies to promote equal participation of all members of society in economic and social development, China could be a role model for its peers and for the whole developing world.