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Accelerate Income Distribution Reform according to the Changes of the Income Gaps (No.249, 2021)


By Qian Cheng, Institute of Public Administration and Human Resources, DRC

Research Report, No.249, 2021 (Total 6314) 2021-9-7

Abstract: China’s National Economic and Social Development and Vision 2035 proposed to make more remarkable, pragmatic progress in common prosperity for all its people, for which acceleration of the income distribution reform is a necessary requirement. In recent years, China’s Gini coefficient has bounced back, the absolute income gaps between urban and rural areas, between regions and between industries as well as in wealth distribution has been widening, which are worthy of attention. These problems are related to China’s institutional factors such as the unsound primary income distribution system, not-fully-leveraged government’s re-distribution function, and unremarkable role of the third-time distribution. In order to accelerate income distribution reform, it is necessary to improve the market-based mechanism for deciding payment based on productive factors, deepen the wage and salary reform for increasing citizens’ remuneration, diversify channels for improving urban and rural citizens’ property income, protect legitimate labor remuneration while regulating the order of income distribution, improve the redistribution mechanism for better and more precise adjustment, and leverage the role of third-time distribution by developing charities, in a bid to optimize the income and wealth distribution patterns.

Keywords: residents’ income, income distribution gap, distribution system, policy options for reform