A Study of Income Distribution in China

Title: A Study of Income Distribution in China

Authors: Cai Fang, Zhang Juwei et al.

Translated by Wen Yayun

ISBN: 978-1-84464-670-8

Ebook ISBN: 978-1-84464-671-5

Hardback - 392 pages

April 2022


£80 €100 $130



As the country with the fastest economic growth in the world, China is faced with the extremely complex income distribution showing both the commonalities of market economies with rapid development and the particularity of China’s institutional mechanism. To study and understand income distribution, it is not only necessary to start with the general law of the development of market economy but with China’s unique system and mechanism. Otherwise, it will be difficult to clearly depict the essence of China’s income distribution. This book is the result of the major project of the National Social Science Fund. This project on China’s income distribution, one of the four major issues when central government leaders came to the Chinese Academy of Social Sciences in spring festival of 2011, becomes the task of the Institute of Population and Labor Economics. According to the plan, the project was aided by experts from other institutes of the Academy of Social Sciences and well-known experts from other institutions outside the Academy of Social Sciences.

China’s implementation of a socialist market economy determines that China’s income distribution has its own unique law in marketization. China’s basic economic system changes into public ownership as its main body with a variety of economic components developing together, requiring its income distribution to change into distribution according to both work and its production factors. Therefore, from the perspective of distribution system, China has both its commonalities and particularity compared with other market economies. Among them, distribution according to production factors reflects the distribution law of market economy and distribution according to work reflects the distribution characteristics of socialist public economy. Different distribution modes will inevitably result in different distribution. China’s income distribution shares that of average market economy and particularity of its basic economic system. These two is intertwined and influence each other, thus leading to the complexity of China’s income distribution.

With the transition from planned economy to market economy, China’s basic economic system has changed from single public ownership to public ownership as the main body with a variety of economic components developing together and the distribution system has also changed from distribution according to work into distribution according to both work and various production factors. In this process, the relatively average income distribution pattern according to work formed under public ownership will be broken and the distribution mechanism of contribution according to production factors will be gradually formed with the income gap widening, giving rise to serious income distribution.




Chapter I China’s Income Trap and Middle-Income Trap

I. China’s Middle-Income Trap

II. Income Distribution and Middle-Income Trap

III. Debate over and Empirical Research on Income Distribution

IV. Conclusion and Policy Implications

Chapter II Manifestation and Essence of China’s Income Distribution Problem ----Factor Capitalization and Unfair Distribution

I. China’s Income Distribution

II. “Crux” of China’s Income Distribution: Unfair Distribution and Factor Capitalization

III. Solution to China’s Income Distribution Problem

Chapter III Changes and Problems in China’s Labor Share

I. Dispute over Labor Share

II. China’s Actual Labor Share Changes

III. Definition of Labor Share Changes

IV. China’s Income Distribution Problem

V. Conclusion and Suggestions

Chapter IV Wage Changes and Wage Growth in China: Should Wage Grow?

I. Wage Changes

II. Is There Room for Wage Growth: Comparison with Profits and Productivity

III. Conclusion and Suggestion

Chapter V Tax System Reform and National Income Distribution

I. National Income Distribution Pattern

II. Tax System Factors in National Income Distribution

III. Impact of Tax System on National Income Distribution and its Reform

IV. Factors Affecting Tax System in “The Third Distribution”

Chapter VI State-owned Enterprises and National

Income Distribution / 121

I. Nature and Responsibility of State-owned Enterprises

II. SOE Reform

III. Corporate Governance and Income Distribution of Privatized ESOs (Employee Stock Ownership)

IV. Income Distribution of Capitalized State-owned Monopolies

V. Innovating ESOP System to Narrow the Income Gap in Privatized Enterprises

VI. Deepening State-owned Enterprise Reform to Improve National Income

VII. Conclusion

Chapter VII Economic Growth and Residents’ Income

Distribution--How to Achieve China’s Residents’ Income Growth

I. Residents’ Income Growth

II. Major Problems Hindering Residents’ Income Growth

III. Countermeasures and Suggestions for Residents’ Income Improvement

Chapter VIII Impact of Labor Market Changes on Income Distribution

I. Positive Changes in Labor Market

II. Employment Expansion Conducive to Initial Distribution Improvement

III. Effect of Labor Flow on Income Distribution

IV. Conclusion

Chapter IX Informal Employment and Income Gap between Urban Employees

I. Informal Employment

II. Informal Employment in Chinese Cities.

III. Informal Employment and Employees’ Income Gap

IV. From Informal Employment to Formal Employment

V. Conclusion

Chapter X Social Security and Income Distribution

I. Regulation Effect of Social Security on Income Distribution

II. Effect of Social Security on Residents’ Income Distribution with Survey Data

III. “Inverse Regulation” Effect of Social Security on Urban-rural Income Gap

IV. Conclusion and Suggestions

Chapter XI Harmonious Labor Relations and Reasonable Wage Growth

I.Wage Formation and Determination Mechanism: International Experience

II. Labor Market System Related to Wage Growth: Wage Guidance Price System

III. Labor Market System Related to Wage Growth: Minimum Wage System

IV. Wage Collective Bargaining System, Collective Contract System and Trade Unions

Chapter XII Income Distribution with International Experience and Lessons

I. Introduction

II. Reason for Widening Income Gap: Capital-dominated Distribution Pattern

III. Reason for the Narrowing Income Gap: Game between Labor and Capital

IV. Income Gap Widening again: Income Distribution in New Economic Era

V. Conclusion and Implications

Chapter XIII Conclusion and Suggestions

I. Rethinking on China’s Income Distribution

II. “Sticking Point” of China’s Income Distribution Problem and its Solution

III. A Correct Understanding of China’s Labor Share

IV. Curb China’s Widening Income Gap through Redistribution



About the Authors:

Cai Fang, former Vice President of the Chinese Academy of Social Sciences (CASS), secretary-general of the presidium of CASS, Member of CASS, chief researcher of the National High-end Think Tank at the Chinese Academy of Social Sciences, and member of the Monetary Policy Committee of the People's Bank of China. His main research areas include labor economics, population economics, economic growth, income distribution, China's economic reform, etc. His main works include China's Economic Development and Its Implications to the World, Beyond the Demographic Dividend, Perceiving Truth and Ceasing Doubts, The“Belt and Road" Handbook (editor-in-chief), and China Wisdom (editor-in-chief), etc.

Zhang Juwei, Director General of Institute of Population and Labor Economics (formerly Institute of Population Studies), Chinese Academy of Social Sciences. Major Publications are Poverty and Nutritional Elasticity in Rural China, A Study of Employment Elasticity in China, , Monographs such as Population, What Will It bring to China (With Cai Fang et al, Population, Ecology and Sustainable Development in China, etc.

About the Translator:

Wen Yayun, an associate professor of Foreign Language School,Zhejiang Gongshang University. She received her Master's degree in English Language and Literature from Zhejiang University in 2000. She has published over 10 articles.