Bloomberg:

How big is the wealth gap now? How will the country control and narrow it? Will tax policies make a big difference? Thank you.

Ning Jizhe:

I'll answer your questions. Wealth inequality is a very important economic challenge. It is fair to say that in the process of building a moderately prosperous society in all respects, China has seen poverty going down and its people becoming increasingly richer. Since the 18th CPC National Congress, China has made continuous leaps in economic strength, all-around progress in people's living standards, and gradual improvements in the distribution of residents' income. Despite disparities, gaps in residents' income between urban and rural areas, among different regions, and among different groups are narrowing in general.

First, the income gap between urban and rural residents has continued to narrow. As a result of poverty alleviation, as well as further agricultural and rural reform and development, the income of rural residents has grown significantly faster than that of urban residents and the income gap between them has continued to shrink. In terms of income growth, the per capita disposable income of rural residents grew at an average annual rate of 10.6% in nominal terms from 2011 to 2020, 1.8 percentage points faster than that of urban residents. In terms of the income ratio of urban and rural residents, their per capita disposable income ratio had dropped year by year from 2.99 in 2010 to 2.56 in 2020, a cumulative decrease of 0.43. The figure went down by 0.08 in 2020 compared with the previous year, the fastest decline since the 18th CPC National Congress.

Second, income disparities between regions have been reduced year-by-year. With the implementation of the coordinated regional development strategy and other new regional strategies, the income gap has been narrowed along with and because of a reduction in the development disparity between regions. Between 2011 and 2020, disparities in per capita disposable income between the richest and poorest provincial-level regions were reduced year-by-year, with the ratio falling from 4.62 (of Shanghai to Tibet autonomous region) in 2011 to 3.55 (of Shanghai to Gansu province) in 2020, the lowest in the 21st century. In 2020, the eastern-western income ratio stood at 1.62, down 0.08 from 2013; the central-western income ratio stood at 1.07, down 0.03 from 2013; and the northeastern-western income ratio stood at 1.11, down 0.18 from 2013.

Third, the income gap between different groups has generally been narrowed. The Gini coefficient is commonly used to gauge measuring income inequality. The World Bank estimates the Gini coefficient by both disposable income and consumption expenditure. When estimated by disposable income, China's Gini coefficient showed a generally fluctuant decline over the last decade. In 2008, the Gini coefficient calculation for per capita disposable income of Chinese residents hit 0.491, the highest in years. Since 2009, it has displayed a downward trend and declined to 0.468 in 2020, down 0.023 from 2018. Meanwhile, income distribution has improved. During the 13th Five-Year Plan period, the per capita net transfer income of residents nationwide grew by 10.1% annually, faster than residents' income growth. Furthermore, according to the World Bank, China's Gini coefficient of consumption expenditure stood at 0.385 in 2016, 0.080 lower than the country's Gini coefficient of disposable income over the same period. Consumption data can better reflect the real living standards of Chinese residents.

Fourth, we have accelerated the realization of equal access to basic public services. The income of Chinese residents covers both household disposable income and public services offered by the government for improving people's lives. In the process of building a moderately prosperous society, all local authorities and government departments have taken active steps to promote equal access to basic public services. Noticeable progress has been made in improving the multi-tiered social security system. China has established the world's largest social security network. The country's basic medical insurance covers more than 1.35 billion people and its basic old-age insurance covers more than 1 billion people. The housing security and supply system has been steadily developed. China has built more than 80 million units of government-subsidized housing and housing for people displaced by urban transformation. It has also improved the housing conditions of more than 200 million poor people. Continuous progress has been made in ensuring equal access to education, and the quality of education has markedly improved. In 2020, the completion rate of nine-year compulsory education reached 95.2%. Basic medical and public health services have also been improved. In 2020, expenditure in the general public budget for health services reached 1.92 trillion yuan. People's work-based earnings, operative income and transfer income have also increased. Meanwhile, aside from household income, some other types of income have been offered through public services. In a country of socialism with Chinese characteristics like us, all government departments and local authorities have done tremendous work in this regard.

During the 14th Five-Year Plan period, we will further contain and narrow the gap between the rich and the poor. We should both make the cake bigger and share it fairly. We will focus on development as the top priority and increase the resident's income by developing the economy, working hard and creating jobs. Meanwhile, we will uphold the system in which distribution according to work is dominant, but support it with a variety of modes of distribution, so as to raise the proportion of labor remuneration. We will improve the mechanism of regular wage growth and strive to increase the income of low-income groups while expanding the size of the middle-income group. We will also improve distribution policies and systems based on production factors to increase the factor income of low-and-middle-income groups. We will develop a more rational wealth and income redistribution mechanism, making more intense and accurate adjustments to taxation, social security, and transfer payments. We will give play to tertiary distribution to support the development of charity. Meanwhile, we will build a basic system to arrange and coordinate the primary, secondary and tertiary distribution to promote social fairness and justice, and the well-rounded development of all. By doing so, we will make a steady stride on the way to realizing common prosperity for all.

You just mentioned taxation in particular, which has played an important role in income distribution. We should make sure taxation plays a fully leveraging role in primary, secondary and tertiary distribution. Thank you.