Social security crucial to balanced income distribution

China should improve second income distribution, especially social security, to lower high Gini coefficient, said Song Xiaowu, standing director of the China Society of Economic Reform, during a news briefing at the China Center for International Economic Exchanges (CCIEE) on Monday.

The Gini coefficient is an indicator of the fairness of income distribution. The higher the Gini coefficient, the more unfair income distribution is.

According to Song Xiaowu, China's Gini coefficient is about 0.47 to 0.49 after first income distribution, which is almost the same as that of developed countries.

But after second income distribution, mainly through the way of taxation and social security, Gini coefficient will reduce 20 to 25 percent in developed countries, while there is almost no change in China.

"Gini coefficient after first income distribution and Gini coefficient after second income distribution have almost no change," said Song Xiaowu, "which indicates the government has much to do in improving second income distribution."

Song pointed out that social security is of great significance, especially during the economic downturn and economic structure adjustment, to narrow the wide gap of income distribution.

"I agree that we should make great efforts on resettlement and social security of some enterprises' staff during reducing production capacity " Song said.

Song made the comments when he talked about the new book China's Road to Economic Transition, which is written by the CCIEE research group led by the center's director, former vice premier Zeng Peiyan.

The book covers 12 aspects of reform and aims to solve system mechanism problems in order to enable China's smooth economic transition.

"This is an all-round design of reform, and a national top-level research and exploration of reform," said Chen Wenling, chief economist of CCIEE.

"The book directly faces social contradictions rather than avoid them," said Song Xiaowu, "It points out the problems need to reform， such as the wide income gap, problems of wealth distribution, and the weakness of social security construction."