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Tackle income disparity

China Daily | Updated: 2014-01-22 08:19

Six years after the onset of the global financial crisis, business and political leaders around the world can no longer shrug off the rising unemployment and widening income disparity as the price that needs paying for a global recovery.

Those attending the World Economic Forum must grasp the fact that the gap between the rich and poor needs to be the key topic of this year's gathering, which takes place in Davos, Switzerland, from Wednesday to Saturday.

In stark contrast to recent optimistic forecasts about global growth prospects in 2014, evidence is emerging that the remedy of cheap money, resorted to by many major economies as a cure for their ills, has so far only benefited the very few that are rich at the expense of the many, many more who are poor.

A just-released report published by the charity Oxfam concludes that the $1.7 trillion in wealth owned by the world's richest 85 people is the same as that shared between the 3.5 billion poorest of the world's population.

It is disappointing, to say the least, that despite so much fiscal expenditure and monetary stimulus, the vast majority of the poor around the world are still suffering from the effects of a global crisis generated by the greed of those better off.

If the world's policymakers do not respond aggressively and promptly to the unequal access to wealth and opportunities that persists worldwide, any optimism over the global economy will prove misplaced.

Fortunately, China has been able to make some progress in this regard.

Its urban median disposable income level has risen to 10.1 percent to 24,200 yuan ($4,000) while the median net income in rural areas has climbed 12.7 percent to 7,907 yuan. China's Gini coefficient, an index reflecting the rich-poor gap, has eased from 0.491 in 2008 to 0.473 in 2013.

Admittedly, a Gini coefficient above 0.4 remains worrying. But the constant fall in China's Gini coefficient since 2008 bears testimony that the inclusiveness of the country's economic growth is increasing.

But Chinese policymakers still need to focus on giving the country's poorer residents a fair shot at benefiting from the country's growing prosperity. The country's success in narrowing the gap between the rich and poor during its economic transformation will be no less significant than its double-digit growth miracle over the past three decades.

 

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