February 6, 2013, 2:33 p.m. ET
BEIJING—The breadth of a plan to narrow the gap between rich and poor, and the fact that it came out at all, heightened the sentiment that China's leaders may be ready to take on powerful interests quickly rather than laboriously trying to reach a broad consensus first.
China's state planners have debated income inequality plans for eight years, and come up with at least a half-dozen drafts, but hadn't managed to win final approval, largely because of opposition of state-owned firms and other powerful actors that could be on the losing end of an income-redistribution scheme.
Premier Wen Jiabao set a final deadline of the end of 2012—and that one was missed as well.
3 comments:
Really interesting that China is trying to create a more equal income distribution as their economy up to this point has mainly been based on exports which they have been able to do in such large amounts in part because of the low wages they pay their workers, which does lead to a more unequal distribution of labor. However, currently China is trying to shift to a consumption-driven, rather than export-driven economy and so I believe the country's planners are trying to create a more equal wealth distribution in order to increase consumption in the country.
I agree with Austin. It is interesting to see how China is going to tackle this situation. Personally, being a frequent visitor of Asian countries, you can see the income-gap quite distinctly. You have people driving Ferraris in the small clustered streets of the inner city. Completely useless and not practical. Simply a statement of wealth. While on the other hand, you have other people in the Chinese society barely able to afford a second-hand bicycle and are trying to peddle off packs of gum to live. However, my interest is how the Chinese government may pull this off. I understand the foundation of Chinese culture comes from the beliefs from the Buddhist religion. Namely, everyone in society is treated as family. I wonder if the government will exploit this fundamental belief among most Chinese. In addition, how are they going to convince the wealthy and rich to basically lower their income. This demographic took advantage of foreign firms coming into the large Chinese market. They worked hard to establish these relationships. Wouldn't the income equality hurt these relationships?
I do honestly doubt the success of this plan. In order to make it happen, I believe China is going to have to exert a great deal of efforts over a long period of time because it is simply not going to happen overnight. But you never know for sure what is going to happen. It's going to be an interesting turnout if China manage to reduce the gap of income inequality.
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