'Grey income' too difficult to define in report

References to regulation of 'grey' incomes - off-the-books gains that have become a source of official corruption over the years - were changed in the version of Premier Wen Jiabao's work report finally passed by the top legislative body.

The National People's Congress said removal of the references occurred because it was too hard to define 'grey' income.

In the draft, the report said the government would crack down on illegal income and regulate off-the-books income, in a bid to 'resolutely' reverse the widening income gap to ensure better social equity.

In the version passed by the NPC yesterday, the phrases were changed to 'protect legal income', 'adjust excessively high income' and 'ban illegal income'.

With the mainland's rapid economic development, the wealth gap between rich and poor is at its widest since open-door policies began in the late 1970s. Employees in government and state-owned enterprises often take advantage of their positions to approve projects, set prices or influence other deals and then to reap 'grey income' in bribes, backhanders and other forms of corruption.

But Gao Wei, a vice-mayor of Chaoyang, Liaoning, an NPC deputy, said: 'There is no recognised definition of grey income. Many people think that grey income is not illegal, but just unreasonable. It's hard to handle this situation.'

Zhang Kangkang, a delegate to the Chinese People's Political Consultative Conference, said 'regulating' grey income was too lenient a term. If the income were not strictly defined, irregularities would become rampant.

Wang Xiaolu - a researcher with the China Reform Foundation, a non-governmental organisation - said embezzlement of public funds and the hoarding of property was one major source of grey income. About 4.4 trillion yuan (HK$5 trillion) worth of 'grey income' was not included in the 2005 official resident income statistics, equivalent to about 24 per cent of the gross domestic product that year, Wang said after investigating the household incomes of more than 2,000 people throughout the country in 2005 and 2006.

It was clear from past graft cases involving officials that personal incomes were far greater than the officials had reported, with many cash deals done or deals done using false identities, former state auditor Li Jinhua , vice-chairman of the Chinese People's Political Consultative Conference and a former state auditor, told the People's Daily.

Li said the growing wealth of top officials' families 'is what everybody is most dissatisfied about', and officials' 'grey income' and cash transactions on the side made it difficult to tell who was on the take.

The omission of references to 'grey income' from the work report would not stop further discussion and study of the phenomenon, Jia Kang , head of the Ministry of Finance's Research Institute for Fiscal Science said. 'It's meaningful to mention grey income in the government work report. Though it is hard to define, off-the-books incomes should be regulated,' Jia said.

Off the record

The amount of money of grey income in trillions of yuan not included in the 2005 official resident income statistics: 4.4t yuan