Need for interest-balancing mechanism

It has become an indisputable fact that there is a great disparity between the haves and the have-nots in China and the gap is widening over time. The problem of polarization, which is directly related to insufficient domestic demand or sluggish market, has not only been at the root of sharpening social contradictions but also seriously hindered the sound development of China's economy. Therefore, how to narrow the gap between the rich and the poor has become a challenge facing us. We need a solution of social mechanism.

We noticed that the uneven distribution emerged in the context of China's engagement in market-oriented reform for 30 years and the establishment of a framework of market economy system. There are only two options to resolve the problem of polarization: One way is to lapse into the previous planned economy and the other is to set up an interest-balancing mechanism under the conditions of market economy. If the former has been ruled out, the latter becomes our only option.

A general interest equilibrium pattern could be reached through a series of concrete mechanisms. Generally, an interest-balancing mechanism under market-economy conditions includes two aspects: One is about market, mainly focusing on labor-capital relations; the other is about redistribution, concerning national revenue and expenditure on social welfare. Although improving State redistribution is a necessary means to establish a more balanced profit distribution pattern, its effect is quite limited given the current stage of China's economic development. So it is more pressing for us to set up an interest-balancing mechanism inside the current market system.