Income inequality could lead to all kinds of social instability, he warns Collusion between officials and businesspeople on the mainland has created a new class of wealthy people and contributed to the widening rich-poor gap, says a prominent economist. Wu Jinglian , an outspoken economist, gave a stern warning on the state of income inequality, saying it could lead to 'all kinds of social instability'. Professor Wu's remarks were carried in the Study Times newspaper, a publication backed by the Communist Party School. Quoting a recent study of salaries by a research institute under the Ministry of Labour and Social Security, the newspaper report said the income gap had widened significantly since 2003. The study's authors said the problem had become severe, and if no effective action was taken, conditions would worsen in five years to become dangerous. Exploring reasons for the wealth gap, the party publication quoted Professor Wu as saying that many of the new rich had benefited from 'money and power' deals between officials and entrepreneurs. He said the new wealthy class included staff from state-owned enterprises and government officials who had taken advantage of their positions to monopolise markets. Some officials had also embezzled state assets. 'All of the core problems are caused by unequal opportunity,' he said. 'Unequal opportunity does not only lead to unfair incomes, but also damages justice and economic efficiency.' The article said Beijing had to put more emphasis on justice. 'The crux of the issue lies with the government,' the article said. 'The government must take on the role of defending justice, while leaving the role of enhancing efficiency to the market.' It cited a United Nations study as saying that 20 per cent of the mainland's wealthy were responsible for 50 per cent of consumption, while 20 per cent of the poor accounted for 4.7 per cent. Salaries of central government officials were markedly lower than those of some local officials because municipal governments have more flexibility over financial resources, the state-backed Oriental Outlook magazine reported. It said central government officials did not receive extra allowances on top of their basic salaries, while many local governments, especially in rich coastal provinces and cities, could afford to offer perks to officials because their coffers included local commercial taxes or management fees. Liu Xutao , a political scientist with the State School of Administration, said he expected Beijing to issue a salary plan for civil servants this year. 'The new measure will define all the real incomes behind basic salaries and encourage all local governments to increase the transparency of different allowances,' said Professor Liu.