Concrete steps needed on income reform in China, say analysts

The long-awaited plan to ease the widening income gap has been cheered by the public, with its ambitions to raise wages and cut taxes for the poor, and allow them to share more of the state's growth. But experts are waiting to see more concrete steps.

The State Council has approved guidelines submitted jointly by the National Development and Reform Commission, the Ministry of Finance, and the Ministry of Human Resources and Social Security, after earlier proposals were repeatedly amended in the past eight years.

The cabinet urged relevant departments and local governments to come up with more detailed action plans, in a statement issued just a few days before the weeklong Lunar New Year holidays, and about four weeks before Premier Wen Jiabao steps down from his 10-year tenure in March.

"It's good timing to roll out the guidelines," said Su Hainan, a vice-chairman of the China Association for Labour Studies. "They will lay a foundation for the new administration to deepen the reforms. The good news will allow us to celebrate the Spring Festival holidays in a cheerful mood."

The more than 8,000-word-long document set goals which include increasing wages and reducing taxes for the poor, liberalising interest rates, and deepening capital markets.

"The plan covers all the bases. Any policy that is generally accepted as being useful in improving income distribution is included in the proposal," said Societe Generale China economist Yao Wei.