Coupled with inflation, it may spark social unrest and weaken state power
By Grace Ng 15 March 2010
A bubble in China’s economy is a cause of great concern as runaway prices may form a potent mix with corruption and social inequity to destabilise society and state power, Premier Wen Jiabao said yesterday.
Tackling rising inflation and the income gap will be the key tasks ahead, he said, pledging his utmost efforts to address social inequality in his remaining three years of office.
However, Mr. Wen stressed that it is still not time to exit the economic stimulus measures, which many claimed have aggravated the social problems. China needs to guard itself against a rebound of the global economic crisis which would hit, as before, it’s poor the hardest.
Mr. Wen was speaking at a press conference after China’s legislative annual meetings wound up by approving a budget skewed towards creating more jobs and improving social safety nets for the poor.
In response to a journalist’s question about fears of a bubble in the economy, Mr. Wen replied: ‘You have raised a question that causes me great concern.’
He said: ‘If rising inflation happens, combined with unequal income distribution and corruption, it will affect social stability and even the state’s hold on power.’
Wary of a ‘double dip’ in the world economy, Beijing is sticking to its crisis policies of loose money and credit to support economic growth.
But this policy has already caused housing prices - a top concern for ordinary Chinese - to skyrocket and created widespread public discontent.
It has also spurred fears of overheating and rising inflation in the economy - a key risk factor choking the economic growth integral to the Communist Party’s hold on power.
A spike in the price of food - which ordinary people can spend up to 40 per cent of their income on - after crop output was devastated by a harsh winter and drought in various parts of China, caused inflation to shoot up to a 16-month high last month.
Mr. Wen noted that besides maintaining a policy of relatively loose money, another key task for Beijing this year is to support China’s rural population.
‘We must try all ways and means to help farmers have a good harvest this year,’ he said. ‘Agriculture is not only the lifeline of the economy but will also help to support growth and control inflation expectations.’
He also pledged to pay much more attention to the poor and the disadvantaged. ‘These groups form the majority of our society,’ he said, acknowledging that there are still ‘many unfair problems in areas such as income distribution and the legal system’.
‘Social justice shines much brighter than the sun’, he said.
His crusade for social justice has recently attracted public attention. His comments during a webchat late last month with Chinese netizens that the people’s lives must be improved so that ‘they can live with dignity’ sparked lively online discussions.
He also pledged during his address to the National People’s Congress (NPC) - the gathering of the Chinese legislators - last week that Beijing must do everything to ensure ‘people live a happier life with more dignity’. This was widely reported in the local media.
The yawning rich-poor gap is a powder keg, some analysts have warned, pointing out that urban incomes are about 3.3 times that of rural earnings - the widest since China launched its market reforms 30 years ago.
Unequal income distribution has now surged way past the level which the World Bank deems likely to arouse social unrest.
Well aware of this potential time bomb, Beijing last week unveiled a budget for this year that will pour significantly more funds into low-cost housing, pensions, health care and other social programmes to help the poor. The focus of the programmes is China’s 700 million rural population.
But analysts such as Mr. Yi Xianrong, a researcher at the Chinese Academy of Social Sciences, feel that the government must go further in addressing unfair income distribution. Changes such as speeding up urbanisation and reforms in the household registration system are needed, according to Mr. Yi.
The NPC yesterday passed an amendment to the election law which allows greater representation for rural areas.
Rural delegations previously represented four times as many people as their urban counterparts, but the amendment will now equalise the ratio.
2 comments:
Wen vows to tackle income gap
Coupled with inflation, it may spark social unrest and weaken state power
By Grace Ng
15 March 2010
A bubble in China’s economy is a cause of great concern as runaway prices may form a potent mix with corruption and social inequity to destabilise society and state power, Premier Wen Jiabao said yesterday.
Tackling rising inflation and the income gap will be the key tasks ahead, he said, pledging his utmost efforts to address social inequality in his remaining three years of office.
However, Mr. Wen stressed that it is still not time to exit the economic stimulus measures, which many claimed have aggravated the social problems. China needs to guard itself against a rebound of the global economic crisis which would hit, as before, it’s poor the hardest.
Mr. Wen was speaking at a press conference after China’s legislative annual meetings wound up by approving a budget skewed towards creating more jobs and improving social safety nets for the poor.
In response to a journalist’s question about fears of a bubble in the economy, Mr. Wen replied: ‘You have raised a question that causes me great concern.’
He said: ‘If rising inflation happens, combined with unequal income distribution and corruption, it will affect social stability and even the state’s hold on power.’
Wary of a ‘double dip’ in the world economy, Beijing is sticking to its crisis policies of loose money and credit to support economic growth.
But this policy has already caused housing prices - a top concern for ordinary Chinese - to skyrocket and created widespread public discontent.
It has also spurred fears of overheating and rising inflation in the economy - a key risk factor choking the economic growth integral to the Communist Party’s hold on power.
A spike in the price of food - which ordinary people can spend up to 40 per cent of their income on - after crop output was devastated by a harsh winter and drought in various parts of China, caused inflation to shoot up to a 16-month high last month.
Mr. Wen noted that besides maintaining a policy of relatively loose money, another key task for Beijing this year is to support China’s rural population.
‘We must try all ways and means to help farmers have a good harvest this year,’ he said. ‘Agriculture is not only the lifeline of the economy but will also help to support growth and control inflation expectations.’
He also pledged to pay much more attention to the poor and the disadvantaged. ‘These groups form the majority of our society,’ he said, acknowledging that there are still ‘many unfair problems in areas such as income distribution and the legal system’.
‘Social justice shines much brighter than the sun’, he said.
His crusade for social justice has recently attracted public attention. His comments during a webchat late last month with Chinese netizens that the people’s lives must be improved so that ‘they can live with dignity’ sparked lively online discussions.
He also pledged during his address to the National People’s Congress (NPC) - the gathering of the Chinese legislators - last week that Beijing must do everything to ensure ‘people live a happier life with more dignity’. This was widely reported in the local media.
The yawning rich-poor gap is a powder keg, some analysts have warned, pointing out that urban incomes are about 3.3 times that of rural earnings - the widest since China launched its market reforms 30 years ago.
Unequal income distribution has now surged way past the level which the World Bank deems likely to arouse social unrest.
Well aware of this potential time bomb, Beijing last week unveiled a budget for this year that will pour significantly more funds into low-cost housing, pensions, health care and other social programmes to help the poor. The focus of the programmes is China’s 700 million rural population.
But analysts such as Mr. Yi Xianrong, a researcher at the Chinese Academy of Social Sciences, feel that the government must go further in addressing unfair income distribution. Changes such as speeding up urbanisation and reforms in the household registration system are needed, according to Mr. Yi.
The NPC yesterday passed an amendment to the election law which allows greater representation for rural areas.
Rural delegations previously represented four times as many people as their urban counterparts, but the amendment will now equalise the ratio.
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