The findings of a recent survey on incomes of Chinese households by the National Bureau of Statistics have attracted much attention from the Chinese media. The following are excerpts from two related comments.

Survey figures point to

remuneration reform

An article by Deng Luwen in the China Youth Daily calls for attention to the decrease in salaries as a proportion of the nation¡¯s Gross Domestic Product (GDP).

China¡¯s national income increased remarkably from 1.3 trillion yuan (US$156 billion) in 2000 to 2.6 trillion yuan (US$313 billion) last year. However, the proportion of individuals¡¯ incomes to GDP dropped from 16 per cent in 1989 to 12 per cent in 2003. This indicates that over the past 14 years, the increase in salaries has been very slow.

A nation¡¯s wealth is made up of three parts: its citizens¡¯ income, national income and revenues of enterprises. In a certain period of time,if the government gets more in its coffers, the ordinary people will get less.

Of course, we must admit that in recent years, the government has made great efforts to provide better infrastructure and public facilities. However, it also can¡¯t be denied that it is still a common phenomenon that government money has been squandered.

In 2002, city dwellers earned 1.2 trillion yuan (US$144 billion) in salaries, accounting for 33 per cent of their total disposable income. This meant that as much as 2.4 trillion yuan (US$289 billion) found its way into the citizens¡¯ pockets via channels other than salaries. The decreased proportion of salaries in GDP suggests a large amount of national wealth has flowed to individuals via abnormal channels, including corruption.

A direct result of the low proportion of salaries in GDP is weak demand. Increase in consumer expenditure was slowed down between 2002 and the first quarter of this year. With the lack of a mechanism supporting continuous income growth, the public are likely to be conservative consumers, which leads to China¡¯s high dependence on other countries for economic development and trade.

Wider rich-poor gap alarming

The survey found that 10 per cent of citizens in cities possess 45 per cent of the urban wealth while the poorest 10 per cent have only 1.4 per cent. A comment in The Beijing News cautions against the emergence of an increasing gap between the rich and the poor.

A widening rich-poor gap can easily occur during social development. In China¡¯s modernization process, the primitive accumulation of wealth has become an important sign of development. However, our overall social welfare system is far from being perfect. The rich-poor gap appearing under such conditions could lead to the formation of new social classes and increased probability of social conflict, with distrust of social morals and laws being the worst possible outcome.

There is no set rule that modernization must be built on wealth at the cost of misery of a certain part of the population. While the government can resort to administrative means such as the taxation system to narrow the gap, it needs to do more to enhance the social welfare system to protect the basic rights of citizens and regulate social relationships.

History has proven that if we let the gap grow out of control, in most cases, while some people accumulate wealth, there will be others who become victims of modernization. This will lead to a restructuring of social relationships and a new power structure.

Rapid urbanization has brought us signs of modernization, and also the concentration of wealth in the hands of a few people. In Beijing, experts have already noticed the formation of ghettos. What happens in our capital cautions us that the wider rich-poor gap should not become a necessary period in development. China should not sacrifice the interest of many low-income families and individuals to achieve urbanization.