As China's widening income gap threatens social stability and hampers consumer spending, the government is moving to reform the revenue distribution system to bridge the gap and inject fresh impetus to a sustainable economic growth.

According to a recent World Bank report, the Gini Coefficient for China, a main gauge of income disparity, surged to 0.47 in 2009 as the country expanded to the third biggest economy in the word, exceeding the "security line" of 0.4, indicating unequal income distribution could arouse social unrest.

The figure was 0.21 to 0.27 three decades ago.

Despite clear government gestures of deepening reforms to increase incomes, for China, it could be difficult, or complicated, to address the problem.

Distribution imbalance

In China, complaints are growing that average income growth lags behind the rise of state fiscal revenue and living costs, while wealth quickly gathers in the hand of a small group of people.

A secretary working in a small business earns less than 40,000 yuan a year, while the same work in a company of monopolistic industry receives three times of that.

"It is unfair income distribution system that widens the income gap," said Yi Xianrong, a researcher at the Chinese Academy of Social Sciences.

In the primary distribution of national income, the proportion that goes to wages and salaries, the major source of China's most mid- and low-income families, has been declining, he said.

The proportion of the total income that Chinese citizens receive from the distribution of national income fell sharply to 57.9 percent in 2007, compared with 68 percent 20 years ago, according to a report from People's Bank of China released in early 2009.

Zhou Tianyong, a professor with the Party School of the Communist Party of China Central Committee, said residents revenue should take up around 60 percent of the national income, comparing with more than 70 percent in the United States.

In addition, income of government and business enterprises should be restricted within 25 percent, which the professor said is a common intentional practice.

Pressing reform

While reporting the government work to the parliament a week ago, Premier Wen Jiabao pledged deeper reforms in the country's income distribution system.

Wen said the income distribution system was an "important manifestation of social fairness and justice" and a major factor in boosting domestic demand and narrowing income gap.

"We will not only make the 'pie' of social wealth bigger by developing the economy, but also distribute it well on the basis of a rational income distribution system," he said.

However, reaching that goal needs systematic changes, possibly including accelerating urbanization, boosting employment, improvement in rural incomes, and reforms in the household registration, or hukou, system, said Yi, the researcher.

"There are obstacles on the way to fair distribution and social justice, and it takes courage and wisdom to carry out the reforms," said Ding Xilin, chief editor of news magazine Xinmin Weekly.