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Government Intervention Needed for Fair Income Distribution: Commentary

The government should help rebuild a fair income distribution system to let workers truly enjoy the fruits of China's economic development

By Xu Mouquan Updated Mar.13

Per capita disposable incomes of residents in Beijing, Tianjin and Hebei province grew 8.9 percent, 8.7 percent and 8.9 percent respectively year on year in 2017, more than China's GDP growth rate of 6.9 percent, according to China's National Bureau of Statistics.

In a commentary for the Beijing Youth Daily, Wu Xuean says that despite this progress, the reality of the past few years is that both the economy and the fiscal revenue have grown faster than urban and rural incomes on the whole.

GDP is distributed primarily among three parties – the government, capital and workers, Wu notes, and if the first two take too much of the pie, wages will dwindle. A declining share of wages means that compared with other factors of production, labor is being increasingly marginalized, Wu argues. This means companies will be unwilling to invest in technological progress, as they can maintain a high return rate of non-labor factors at a low human resource cost, he warns.  

The government should go beyond formulating minimum income standards and company wage guidelines, and guide the unfair income distribution system back to a healthy track that runs within the legal framework, he argues. And it should help rebuild a fair income distribution system as the guardian of legal justice and fairness, aware of its power’s limits, to let workers genuinely enjoy the benefits of economic development.