State-owned Enterprises

A sensible step towards a just society

PUBLISHED : Monday, 18 February, 2013, 12:00am
UPDATED : Monday, 18 February, 2013, 1:55am

In every nation there are people who have more than others, but on the mainland the gap is worryingly wide. Leaders have long been mindful of the need to lessen the divide, their efforts spurred by a rising tide of protest against injustice and corruption. China's size and complexity makes the challenge daunting and measures taken so far have not approached the heart of the problem. A 35-point plan unveiled by the State Council appears more promising, the proposals outlined offering a blueprint for tackling inequality.

The ambitious scope of the plan reveals how worried leaders are about the wealth gap. They well know that vast inequality threatens stability, growth and development. It has been the underlying reason for growing social unrest and distrust of those who hold power. Incoming president Xi Jinping's drive against corruption, particularly officials who have used their authority to enrich themselves and their families, is an essential accompaniment.

But as in all proposals with sweeping intent, the devil is in the detail. The document is short on specifics and timelines. Of the guidelines, the most detailed is that state firms will be required to hand over an extra 5 per cent or so of income to the government by 2015 to finance a more generous social security net. Other goals include increasing the minimum wage to 40 per cent of average salaries, strengthening rural land rights, improving the pension and health-care systems, liberalising interest rates and implementing a nationwide property tax.

No one wishing a fair and balanced society could object to such sensible proposals. But successful implementation rests on those with vested interests giving up their advantages. The monopolistic state-owned enterprises share a considerably smaller proportion of their revenues through dividends and taxes than is accepted internationally and an additional 5 per cent will little dent their huge profits. Local governments and corrupt officials will want little to do with giving farmers a stronger claim to land; turning rural land into commercial property has been a mainstay of their income.

Premier Wen Jiabao, whose term ends next month, promised to "resolutely reverse the widening income gap". He has had mixed success, with the divide dropping from a peak in 2008 but remaining similar to when he took office a decade ago. A plan with the potential to bring about change has been announced. If it is to succeed, Xi's government has to ensure it is properly fleshed out and resolutely implemented.