New plan to reduce income inequality

Adjusting interests

Chi Fulin, president of the China Institute for Reform and Development, called for the immediate release of the framework.

"A crucial question is whether government agencies are willing to reorient their own interests and surrender their privileges," he said.

Chi said the state capital and revenue should be a major source of social welfare and state-owned operations should contribute more to public welfare.

More revenue should be taken from state-owned companies, from the current 10 to 15 percent to about 25 percent in five years, he suggested.

"After 30 years of reform and opening up, the country is facing a second round of market reform driven by fairness and sustainability, which is more challenging," Chi said.

"Consumption will be a major force to keep rapid economic growth in the coming 10 to 20 years, and narrowing the income gap is a precondition to release the great consumption potential," Chi said.

Equal opportunities

Solutions provided by policymakers must "get to the root of the problem", said Chen Shaohua, a Washington-based senior statistician at the World Bank’s Economic Research Group.

The country needs to provide an ascending corridor for the less well-off to prevent poverty passing from generation to generation, Chen said.

She cited a cash transfer program in Brazil as an example. The government pays about $120 per month, on average, to low-income families if they send their children to school. This has boosted school attendance.

Income inequality has gradually decreased in many Latin American countries due to continuous investment in education.

"The root solution lies in improving the equality of opportunity," Chen said.

lanlan@chinadaily.com.cn