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China works on enlarging its middle-income group

Updated: Jul 19,2018 3:12 PM     chinadaily.com.cn

China is working on measures to enlarge its middle-income group, including increasing earnings for the low-income class, equalizing public services and reforming taxation, as Economic Information Daily reported on July 19.

The report cited data from the China Institute for Income Distribution of Beijing Normal University, showing that the middle-income class is expected to scale up to 43 percent in 2020 if there are no policy changes, while the figure could reach up to 50 percent with preferential policies.

To let more money go into the pockets of the low-income class is one means to strengthen the middle-class pool, experts told the newspaper. As of July, at least 12 provinces or regions have raised minimum wages, and six regions — including Shanghai, Guangdong, Beijing and Tianjin — have had their minimum wages exceed 2,000 yuan ($296.8) each month.

“The group with payment below the minimum level benefits most from the minimum wage adjustment scheme, but the policy also does good to higher-wage earners in some degree,” Wan Haiyuan, deputy dean with CIID, told Economic Information Daily.

He added that though it is reasonable to gradually increase the minimum income, blind augmentation will cause pressure on employment.

Li Shi, executive dean of CIID, said in an interview with the newspaper that farmers, migrant workers, self-employed entrepreneurs, small and micro business owners and startup pioneers all possess the potential to access to the middle-income level and should be the target of policy support.

At the same time, to break institutional barriers in the way to stretch up to middle income is also important. Li said that improving social security system and boosting human resources could help to promote low-income flow into the middle-income class, while government should create room for the existing middle-income group to move up by focusing on issues like occupational mobility and the steady rise of salaries.

“The individual income taxation structure still needs to be optimized to relieve burdens for the middle-income group,” Guan Bo, assistant researcher with the social development research institution of the National Development and Reform Commission, said to Economic Information Daily.

Guan noted that better quality in public services ranging from elder care, healthcare and education and lowered expenses are needed to stabilize the group.

The crucial cause of income disparity is education, according to Sun Jingfang, assistant researcher with the Chinese Academy of Social Sciences, as Economic Information Daily reported.

Sun said that government should advance education equalization, and improve education quality in rural areas in particular, so as to lay a foundation of human resources for expanding the middle-income group and economic development.

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