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By Shi Wujie, Department of Development Strategy and Regional Economy, DRC

Research Report, No.309, 2020 (Total6053) 2020-12-22

Abstract: In recent years, the overall pattern of income distribution in China has improved, whereas the income gap still remains large. In view of international experience, long-existing large income gap will lead to severe consequences. Narrowing the income gap is not only necessary for achieving the 2035 modernization goal and marching toward common prosperity, but also a practical need for expanding domestic demands and developing a dual-circulation development paradigm. At present, the increase of the proportion of labor payment is constrained by the transformation of employment structure and unsound institutional mechanisms. Moreover, insufficient capacity of sustainable development in the central and western regions makes it hard to narrow the urban-rural and regional income gap and the control of the expansion of wealth disparity is under the pressure of surging housing prices amid ample liquidity. In the new era, related departments need to accelerate the establishment of an industrial foundation and institutional environment that can promote steady increase of residents’ income, step up the cultivation of driving forces for high-quality development of urbanization in the central and western regions, adhere to the principle that houses are for living in and not for speculation bolstered by the building of a long-term mechanism, and push ahead with the reform of taxation structure.

Keywords: income gap, modernization, new era