(China Daily)
Updated: 2008-02-28 10:50

A recent report announced that Xing Pu, a member of the Shanghai municipal committee of the Chinese People's Political Consultative Conference, said the government should give 1,000 yuan ($137) to each Chinese citizen as a special subsidy to cushion them from the pressure of inflation.

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A specialist in economics, Xing said the idea was to share the fruits of the country's economic progress among all people fairly and equally. He said people's actual purchasing power had been infringed upon by the continuous rises in the prices of commodities, even as the country has seen remarkable improvement in its economic power.

Xing's suggestion is out of box, indeed. But the proposed universal subsidy may not serve the purpose Xing intended. If everyone got an extra 1,000 yuan, it would have the same effect as the central bank putting more cash into circulation.

Thus, commodity prices would be driven up, inflation would worsen and common people would feel even more pressure from the price rises. They would not be enjoying real wealth.

Despite the questionable feasibility of his suggestion, Xing has singled out an issue that is calling for urgent attention - actual incomes are shrinking.

The figures from the National Bureau of Statistics said the GDP grew by 11.4 percent in 2007, and government income reached 5 trillion yuan, representing a 31 percent rise over the previous year.

During the period, the per capita disposable income of urban residents increased by 17.2 percent, and the average income of the rural dwellers was up by 15.4 percent.

The gap between the growth rates of State and individual income is notable.

Driven by the country's high-speed economic development, the consumer price index (CPI) has also been on a steep rise. The CPI grew by 4.8 percent last year. And in January 2008, the CPI was 7.1 percent higher than it was during the same time last year, which was a record for year-on-year growth of the past 11 years.

To make things worse, the snowstorm that hit the central and southern regions of China during the winter hurt agricultural production in those areas, raising people's expectations of further inflation, especially for food.

The climbing prices of consumer goods have erased the gains from rising incomes.

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