He Jian, deputy director of the National Bureau of Statistics, said that the irrational income distribution and the widening gap in personal incomes are the fundamental reason for China's insufficient domestic demand.

He added: "An evident problem in China today is that the irrational income distribution has not been resolved yet.

"In the first place, the ratio of residents' income to the gross domestic product – the value of goods and services – is too low,” he noted.

The ratio of workers' wages to the industrial added value is 19.8 percent in China, compared to 30-40 percent in developed nations. The ratio of residents' consumption to GDP is 45-50 percent in China, as against 60-65 percent in developed countries.

"Secondly, the gap between urban and rural residents in income and consumption is widening," said He Jian, a member of the National Committee of the Chinese People's Political Consultative Conference.

In 1999, the per-capita income of urban residents was 5,889 yuan, while that of rural residents was only 2,210 yuan. In terms of consumption, urban residents were 6,750 yuan per person and rural residents, only 1,918 yuan per person.

“Thirdly, the gap among residents in income is widening, with the tendency shown toward polarization,” he said.

He Jian noted: “A major measure to solve the insufficient demand should be adjusting the income distribution and increasing the income of low-income residents.”

He aired the view that during the 10th Five-Year period that starts in 2001, China should, through financial payment transfers, increase wages of low-income workers and staff, and raise farm product prices to increase the residents' real incomes.

In income distribution, he said, it is imperative to standardize laborers’ remuneration distribution system.

He added that measures should also be taken to, via tax adjustment and financial payment transfers, coordinate the distribution relation between the country and the town, between regions, between industries and between social groups, in order to achieve common prosperity.

(People's Daily 03/13/2001)