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Academics: Fix Income Disparity Urgently

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The growing income gap between the rich and the poor has prompted calls for measures to ensure an even distribution of wealth.

The Economic Information Daily, published by the Xinhua News Agency, quoted academics and researchers as saying that corruption plays an important role in the widening poverty gap.

The newspaper reported that the Gini coefficient, measurement of uneven distribution of wealth, has already exceeded 0.4 in China, a level commonly recognized by the international community as the warning line.

"China's Gini coefficient exceeded 0.4 10 years ago, and it keeps increasing over the years. The poverty gap has gone beyond reasonable level," the report cited Chang Xiuze, an economist at the Macro-Economics Institute of the National Development and Reform Commission (NDRC), as saying.

Su Hainan, director of the Labor Salary Institute under the Ministry of Labor and Social Security, said the income disparity between urban and rural residents is 3.3 times. The income of senior staff members in State-owned enterprises is 128 times higher than the social average.

Li Shi, a professor of Beijing Normal University, said the income disparity between the top 10 percent high earners and the bottom 10 percent of the lowest earners has increased from 7.3 times in 1988 to 23 times in 2007.

The report said some rich people have "hidden incomes," based on a study conducted by Wang Xiaolu, deputy director of the National Economic Research Institute of the China Reform Foundation. The study showed that the hidden incomes reached 4,800 billion yuan (US$703 billion).

The report linked corruption to the hidden incomes, citing the case of Chen Tonghai, the former chairman of Sinopec Corporation who was sentenced to death for taking 196 million yuan (US$28.7 million) in bribes.

The report said those who gained from corruption will continue establishing a connection with high authorities to reinforce their status, which will hinder even distribution of wealth.

Some people have gained fortune by possessing limited resources. Tang Jun, a researcher with the Chinese Academy of Social Sciences, said some property developers purchased land from farmers at a low cost, but they sell the apartments at a much higher price. Those who cannot afford an apartment will never be able to gain fortune, Tang said.

In some regions, coal mine owners earned millions of yuan, while farmers only earn an average of 4,359 yuan (US$638) a year.

"The uneven distribution of resources has worsened the uneven distribution of wealth," Chang said.

"Although the society is more tolerant of uneven distribution of wealth, there will be unimaginable consequences if nothing is done to stop the trend," said Yang Yiyong, a deputy director of the Economics Research Institute of the NDRC.

(Global Times May 11, 2010)