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Thursday, February 7, 2013

China declares war on social inequality


The plan 35 points and approved by the State Council, the Chinese executive, raising taxes raises to state enterprises (SOE), the wealthy or investment property tax to allocate this income to raise the minimum wage or spending on education, health or public housing. As for the tax reforms, the government will increase by 5% tax on the profits of state companies, currently transferring only a small part of their profits to the state coffers. These companies are under a lot of pressure from the reformist sectors, ensuring thatbenefit from certain privileges with respect to private sector companies. Now, the benefits of these companies are seen as a potential source of funding for Chinese Social Security, including pensions or health of 1,300 million citizens of the country. The document notes, without setting an exact time, it will be uploaded fees for real estate transactions and activities and luxury goods, and opens the possibility of introducing an inheritance tax. Since the Development and Reform Commission of China, responsible for developing the plan, and warned in a statement that these reforms are "sophisticated and complex"and that "involve the reassignment of many interests, so there is no way to carry out overnight "The guidelines, which focus on the objectives but the details escape-especially regarding tax-hikes, are horizon concrete reforms before 2015, and marked the target lift 80 million people out of povertyThe authorities will go through, in three years, putting the country's minimum wage to 40% of the average wage of urban workers, covering about 75% of health spending or get 20% of homes in the cities are officially protected. "The plan looks good, as it focuses on the fundamental problems of the Chinese economy, which are the great inequities and unbalanced growth, " said Ole AndrĂ© Kjennerud, analyst at Norwegian bank DnBHowever, the expert also felt that these guidelines "should have come sooner, as in 2007 or 2008 the nation was in an ideal position to implement many of the initiatives of the plan." Furthermore, the document gives a clear signal to change the economic growth model far too dependent on public investment, to give a greater role to consumption and domestic demandIt also addresses the changing of residence permits or "hukou", noting that rural citizens "will have more opportunity to transfer his official residence to the cities ", and opens the door to pro-market reform of interest rates. According Kjennerud, deregulation of these rates "is a step towards a more equitable distribution of income," since, in his view, "boost the wealth of the middle and lower classes, something that will serve the domestic economy and consumption". The economic growth of the Asian giant with an annual average of 10% in recent decades has led to gross inequalities in income, especially between rural and urban populations and between eastern and western areas of the country. According to official data, in 2011 there were up to 128 million people below the poverty threshold, which is set to 2,300 yuan per year (the equivalent of $ 366)Recently, the National Bureau of Statistics estimated the Gini coefficient, an indicator of the country between zero and one that measures inequality in income-0.474, above the level of 0.4, according to the United Nations, indicates danger of discomfort social"I think the most important part of this plan is the message," says Norwegian analyst, who adds that, in the words of former Chinese leader Deng Xiaoping, "to the smaller boat gets up on a sea that grows. And now they want to increase the size of the smaller boats. "

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