Chapter 3: Income Distribution

Since China began economic reform and opening up, policies have been implemented to open the country to the outside world and to create an economic system based on free competition. The pursuit of efficiency and market allocation has brought great economic development and prosperity. However, these policies have also widened the income gap between members of society, resulting in the Gini coefficient remaining high and even once breaking through the “International Warning Line”. Presently, China has changed from a nation with a relatively small income gap into one with some of the largest income inequality in the world. This has detonated a series of social problems—so much so that the calls for reform of the current income distribution system are growing louder. It is therefore of the utmost urgency to carry out such reform.