Zhejiang province tasked to narrow wealth gap by 2035 to showcase efforts

2021.06.12
Zhejiang province tasked to narrow wealth gap by 2035 to showcase efforts

Beijing has tasked the eastern province of Zhejiang with a pilot project to narrow the wealth gap, a nationwide issue that threatens to undermine the Communist Party’s legitimacy.

Zhejiang should boost its economic output and improve the average income of residents in both urban and rural areas to a level equivalent to those of a developed country by 2035, the party’s Central Committee and the State Council — the executive arm of government — said in a document on Thursday.

The province that houses some of China’s largest internet companies, including Alibaba, has been designated as a testing ground for efforts to reduce the wealth gap. The long-term goal was to make people across China “wealthy together,” the top leaders said in the document.

Measures to be put in place in Zhejiang would include redistributive adjustments targeting high earners, a mechanism for “reasonable” salary increases, changes to the way bonuses are awarded by listed companies and incentives to firms to award shares to employees, according to the document.

The position of state-owned firms would be bolstered while corrupt officials and monopolies would face more severe disciplinary action, the document said.

China’s top leaders needed to take action because discontent over the wealth imbalance and other recent economic issues could undermine their grip on power, veteran commentator Johnny Lau told Apple Daily.

Mainland China has long avoided any official disclosure of its Gini coefficient, a measure of income distribution, but Premier Li Keqiang gave a glimpse of the situation last year when he revealed that 600 million people in the country only earned 1,000 yuan (US$156) a month, Lau said.

This level, if compared to China’s gross domestic product per capita of US$10,000 a year, showed a wide income gap in the country, Lau said.

Anti-monopoly efforts noted in the document were unlikely to help redistribute wealth because the Chinese government was the largest monopoly of resources in the country, Lau added.

The pilot project would mean that large private companies would be required by government policy to allocate part of their income to wealth redistribution, said Bruce Lui, a senior journalism lecturer at Baptist University and a former reporter on China.

Zhejiang, the country’s fourth-richest province with a GDP of 6.4 trillion yuan last year, had the capacity to share its wealth to its poor people, but other provinces might not be able to do the same, Lui said.

The income imbalance facing urban and rural areas across the nation remained a major challenge for China, Lui added.

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