Chapter 7 Chapter 5 Income Inequalities: A Growing Problem

Is China the place with the largest income gap in the world?Sometimes it feels like that.In Shanghai where I live, I can often see many beggars with children begging along the street; young peddlers shuttle through the crowded traffic, taking advantage of the gap between traffic lights to sell goods to car owners. Some of them seem to use bridge holes as Home; Many people live in poor conditions. In the 1930s, the narrow alleys were crowded with dilapidated houses, and people still used public toilets and public running water.Such scenes are commonplace in some African and Latin American capitals, but the difference in Shanghai is that the customers of the small business owners in the traffic are driving BMWs, Audis or Porsches and living in luxury villas worth millions of dollars.Similar scenes can be seen in many parts of China.

As the financial crisis hits China's exports, China's poorest — migrant workers from rural areas — are bearing the brunt.Although there is no exact data, it is estimated that at the end of 2008, about 20 million migrant workers in the coastal areas were unemployed. Most of them returned to their hometowns to work in agriculture to make ends meet, but it was difficult to earn more income.Those who were lucky enough to keep their jobs saw real pay cuts as well, some more than halving after overtime pay and other benefits were eliminated.Before the financial crisis, about 80 million people in China were living below the international poverty line.The lack of statistics makes it difficult to estimate the impact of the current financial crisis, but the number of people living below the poverty line is likely to be on the rise.

A widely accepted view is that China's economic growth over the past 30 years has come at the cost of widening income inequality, especially between urban and rural areas.According to official statistics, China's Gini coefficient (an index used to examine income differences among residents, the coefficient value is between 0 and 1, and a larger value indicates greater income inequality) has risen from 0.2 to 0.25 before the reform to 0.45.Some domestic scholars believe that the actual Gini coefficient may be higher, close to the income gap in Latin American countries (the Gini coefficient in Latin American countries is generally 0.6-0.7).The current government has identified the urban-rural income gap as one of China's biggest problems since its inception, and has been working over the past five years to address it by increasing investment in rural areas, revising the Labor Contract Law, and improving the social security system. reverse this imbalance.

In this chapter, we discuss the current issue of urban-rural income inequality in China and the trend of widening income gaps in recent years.Income inequality in China is clearly getting a lot of attention.Economists at home and abroad have done a lot of research on this important issue using various world-class research methods.In this chapter, we will see the views of some serious economists, who believe that the income gap between urban and rural areas in China may not be as large as many people imagine, but the income gap within cities and within rural areas is even larger. Before we start, a little clarification. In April 2009, I published an article on China's income inequality on the "Wall Street Journal" Chinese website, which attracted the attention of many netizens.Thanks for this.Most netizens are concerned about how serious China's actual income imbalance is compared to official data.Some see "grey income" (including illegal income such as bribery and legal income not declared and taxed as required) as a big problem, so that the income of the powerful and rich has increased even more.Some readers who commented expressed the pain of being laid off and unable to afford medical care and children's education.Some readers also questioned the issue of the gap between the rich and the poor that I discussed, thinking that these pretentious studies are based on official survey data. Who would believe official data?To borrow another reader's description, this is simply "buildings built on sand".

There were also critics who argued that the article did not take into account "gray income".Therefore, in this chapter, we will refer to the research of Professor Wang Xiaolu of the National Economic Research Institute to correct this problem. Professor Wang tried to use a more accurate method to measure the real income level, but his research only involved the situation in 2005. We still lack actual revenue data for calendar years.Therefore, it is difficult for economists to conduct in-depth research on this issue.As for how to solve the problem of corruption, economists may tell you to cut down on administrative agencies and pay higher wages to maintain honesty.This approach has effectively suppressed corruption in other parts of the world.But China's corruption problem is more difficult to solve because the country's judiciary lacks independent oversight of the government's executive branch, causing a series of problems.However, that is not the focus of the WSJ article, or what this chapter will focus on.

In this chapter we focus on the broader issue of urban-rural income inequality.Is the income gap between urban and rural areas as large as many Chinese believe?Of course, when it comes to "gray income", it is not difficult to see from media reports that officials accept bribes in both urban and rural areas, and ordinary residents in urban and rural areas may also have a large amount of "gray income". More, we guess that the amount of "gray income" of urban residents is also larger.Thus, all illicit and legal but unreported funds affect real income levels, to some extent more significantly in urban income levels.However, this problem has existed since the 1980s, so to a certain extent, it will not affect the conclusions of the research in this period.More importantly, since the government's policy arrangements are based on official income statistics, if we can find evidence that there is a big problem with these statistics that reflect that income inequality has not worsened, that is still the meaning of our research .

Also, keep in mind that we're talking about income levels here, not the general quality of life experienced by people.Of course, as economic researchers, we also need to consider quality of life, so we also look at inequality in areas such as health care and education.Imbalances are clearly worse in rural areas than in cities.I discuss this issue in other chapters of this book.In this chapter, we focus first on income levels. So, to be precise, I am not denying that income inequality is a big problem in China right now.There is no doubt about this, and the income gap between urban and rural areas is still obvious.Income inequality is a problem all over the world.But what I try to show in this chapter is that the overall income gap between urban and rural areas in China may not have risen as much as most Chinese think.In addition, the problem of income inequality exists not only in rural areas, but also in cities.

If the research results show that rural income levels have indeed not lagged behind urban income levels by a large margin over the past 10 years, it will have a great impact on central policymaking.Rather than "sprinkling pepper noodles" to invest in rural areas, we need to use our brains on wealth distribution and target those low-income groups who really need subsidies.The good news is that China has improved in this area in the past few years, with the establishment of the Dibao system, where poor families can receive subsidies from local governments; the bad news is that there is still much to be done.The assistance target of the Dibao system is not accurate enough, that is to say, many families who do not need the Dibao get the Dibao, but those who really need it do not get the Dibao.In addition, there is also controversy over the payment standard of Dibao. Should a person who will never work be entitled to Dibao?If you give him a subsidy, will it dispel his enthusiasm for finding a job instead?Aware of this problem, the U.S. government limited the unemployment assistance system to two years in the 1990s.But what about those who really can't find work if unemployment benefits aren't paid out?This is indeed a difficult problem.If you pay attention to the dynamics in the United States and Europe, you will find that many developed countries have not yet found a social welfare system that not only guarantees welfare but also motivates people to work.That said, the whole world still has a common question: "How exactly do we properly address inequality in society?"

Let us begin our analysis with the history of New China.First, the myths of the Mao era must be dismantled.Some people say that the era of Mao Zedong was an era of income equality, and since then, the income gap has widened.Is that true?During the Mao era, rural households were allocated a share of collective output according to their individual needs (or contributions to collective agricultural labor).Commune hospitals and barefoot doctors provide free basic medical insurance and implement compulsory education.In this way, within the same village, farmers get approximately the same income.Because the government encourages the independent division of regions, farmers who cultivate high-quality land will have better harvests than farmers with poor land, so there is a large income gap between different villages.Some people estimate that the agricultural income of some villages is more than 6 times that of other villages (the data at that time were not enough to estimate the Gini coefficient, but it clearly reflected the income inequality).

During the Mao era, most city dwellers had regular jobs.Receive wages and labor insurance (as well as allocated housing) from the unit, and enjoy medical treatment, education and other benefits.The income of urban workers is basically the same (though if you are a party cadre, you may be able to use your power to earn more), and the income gap between different cities is very small.But in the 1950s, the ban on rural-urban migration and the lack of industry in rural areas shut down most of the country's private food markets, meaning the rural population was overall poorer than the urban population.According to Thomas Rawski's estimate, the ratio of urban to rural incomes during this period was as high as five or six times.

Therefore, the myth that China was a socialist paradise with very equal income before the reform and opening up may be broken.At that time, not only was the economic foundation weak and the people lived in poverty, but there was also the problem of income inequality. China has undergone profound changes since the 1980s.The advancement of the reform of the market-oriented economic system has enabled those with capital, skills, creativity, or "rent-seeking ability" to quickly use the resources in their hands to increase their personal income; After housing, social security and other subsidies, life is relatively difficult.In this semi-market-oriented economic system, the income of employees of state-owned enterprises in certain industries has increased, while the wages and benefits of employees of state-owned enterprises that have failed to adapt to the new situation have decreased.Therefore, while the overall income within the city increases, the income gap also widens. In rural areas, after land is contracted to households, hard-working, good at farming and access to fertile land have the opportunity to generate more income.Township entrepreneurs and farmers who migrated to cities in search of opportunities also improved their economic conditions. Increases in agricultural prices in the early 1990s also benefited all farmers.This has inevitably led to a widening of the income gap within rural areas.But at the same time, the migration of migrant workers and the development of the food market mean that the quality of land is less important in determining farmers' income.This also means that income inequality between different rural areas is decreasing. But income disparity aside, the very important fact is that everyone got richer.World Bank scholars Martin Ravallion and Chen Shaohua found that the proportion of the rural population living below the poverty line dropped from 76% in 1980 to 22% in 1987. "China's (uneven) Progressin Poverty Reduction", Journal of Development Economics, 82(1), 2004During this period, the absolute poverty population in China has been greatly reduced.But after that, something unfortunate happened: Progress in poverty reduction stalled.After rising in the 1980s and early 1990s, overall income in rural areas remained flat in the mid to late 1990s. In 1987, 16 percent of rural households had incomes less than half of the rural median income. In 1995, this rate fell to 7%. In 2001, the proportion of rural households whose income was less than half of the median income rose to 11%. The deepening poverty of the rural poor in the 1990s supports Huang Yasheng's argument discussed in Chapter 4. At the same time, the problem of income inequality in rural areas was more serious than that in urban areas at the beginning of the reform. With the deepening of economic system reform, this problem has worsened, but to a very limited extent.According to the data of Benjamin et al., the Gini coefficient (measuring the income distribution differences between different rural areas) in China’s rural areas was 0.32 in 1987, and rose to 0.37 in 2001.In other words, the Gini coefficient and income inequality are not the number one problem in rural areas. The biggest problem is that overall income growth in rural areas has stagnated. During this period, how did the income gap between urban and rural areas change?Official statistics show that the income gap has widened. From 1987 to 2001, the overall Gini coefficient rose from 0.37 to 0.44, and the current coefficient is 0.45.A rise in the Gini coefficient, a sign of widening income inequality, is also a headache for policymakers.Many Chinese scholars even believe that the level of income inequality is still underestimated. Here we draw on the research of Professor Wang Xiaolu from the National Economic Research Institute.Wang Xiaolu, "my country's Gray Income and Resident Income Gap", "Comparison" No. 31, July 2007. In 2006, Wang Xiaolu conducted a very meaningful income survey. The survey method was to ask visitors to know the income of their relatives and friends.Because he believes that this can better reflect the real income level than the stranger's household survey, and guarantees the confidentiality of the survey data to each respondent.The results of his survey are both surprising and expected, showing that the income level of residents is much higher than the data released by the National Bureau of Statistics.He found that in 2005, the national per capita annual disposable income reached 19,730 yuan, 1.9 times the official statistics.Underreporting exists in all income groups, especially in the high-income group.Wang Xiaolu estimated that the average income of the high-income class reached 97,127 yuan that year, 3.4 times the official statistics. This category includes businessmen and other people who accept bribes.That is, everyone's income level is higher than the official statistics, and the wealthy group is much higher.Wang Xiaolu estimates that in 2005 there were about 19 million households belonging to the high-income class, but this is the data from four years ago.In terms of income gap, Wang Xiaolu found that the per capita income gap between the highest and lowest income 10% of households in the country is about 55 times, while official statistics show that the gap is only 21 times.In other words, the income gap reflected in Wang Xiaolu's sample data is about twice that of the official data. As I mentioned in the introduction to this chapter, as an economist, it is difficult to interpret such results.Without more data to support it, it is almost impossible to give an answer.As in other developing economies, there is clearly a lot of "gray income".There are many reasons for "gray income", and "gray income" has become a serious problem.In addition, as mentioned above, since there are more opportunities to obtain "grey income" in cities, income inequality between urban and rural areas may be exacerbated.Therefore, to a certain extent, non-standard income may be one of the reasons for the widening income gap between urban and rural areas. We will also see later in this chapter that non-standard income will also increase income within cities and within rural areas. gap, which we all agree on. Other economists raised more technical questions, questioning the quality of official income data and the statistics used to calculate the Gini coefficient.More contentious areas include what should be included in the income data - just salary income, or also include social security benefits received?The standard practice is to include all income, benefits, and public services and pensions that residents can enjoy into the statistical caliber of residents' income.But China's statistical methods are usually not like this.If all income items are included, urban household income may be higher than official statistics.However, with the promotion and improvement of public services in rural areas, this situation may change.Official income statistics also do not include housing subsidies received by urban households, or the rent value of households living in owner-occupied housing.According to international practice, this item should be included, because there are few similar subsidies in rural areas, and if housing subsidies are added, the wealth of urban residents is likely to be higher than their cash income level.However, most of the relevant research ignores this point. Another question is, is there a difference in cost of living that needs to be considered?A monthly income of 3,000 yuan can be regarded as a high income in most rural areas of China, but in any big city, the pressure of living at such an income level is still relatively high.Studies have found that urban prices are 35% to 40% higher than those in rural areas (but this statement is disputed).The higher cost of living in urban areas will undoubtedly erode the income of some urban workers; while the income in rural areas is relatively low, the quality of life may be higher.Therefore, foreign scholars usually use the price level of relevant regions to adjust the income data, so that they can more clearly see the gap in the income purchasing power of urban and rural residents.This is also one of the shortcomings of Chinese statistics. The second issue is the availability of the data itself.Due to data sensitivity and other reasons, the National Bureau of Statistics does not publish all collected household income data, which limits our ability to analyze and test official data.This is a far cry from a world-class research institution.The world's top academic research institutions usually publish their statistical data on the website, so that everyone can check the data. This way is easy to find mathematical calculation and modeling problems in data statistics, so as to ensure the quality of research results. Of course, there is one problem with all income statistics: people lie.This is not a problem unique to China (although Professor Wang's research suggests that it is a big problem in China).People with high income levels tend to underreport their income so as not to draw the attention of tax officials.This is common in countries such as Mexico, Kenya, and the United Kingdom.It's not just high-income earners who underreport their income, though. Middle-class families do the same, and even low-income families may underreport their income to avoid losing the low-income subsidy.A big problem across Europe is that people hide income in order to get unemployment insurance.In China, the problem of underreporting income may be even more serious due to the lack of a unified system for multiple verification of income data.In other countries, tax inspectors can ask your employer about your salary, get your account information from your bank, and check your property from the land registry.In China, at least for now, tax officials have little to no way of verifying reported income.I also heard that the investigators of the urban survey team of the National Bureau of Statistics were rejected by residents of a high-end apartment in Shanghai. It can be seen that the National Bureau of Statistics cannot accurately grasp the income of high-income families, so its statistics are inevitably biased. There may also be a problem with official income statistics.In recent years, with urban expansion, a large number of rural areas have been classified as cities or towns.This is a natural manifestation of China's urbanization process.In this process, farmers (who are relatively wealthy) who are closer to cities and towns are "converted from farmers to non-farmers" to become urban population.Wealthier groups in the original rural population sample were transferred out, and poorer farmers far away from cities and towns were left in the statistical sample of rural residents, which inevitably caused the average income in rural areas to decline, manifested as a further widening of the income gap between urban and rural areas.In fact, Benjamin and his co-authors kept the urban-rural household classification unchanged and re-estimated the urban-rural income ratio. They found that the urban-rural income gap did not change much between 1987 and 2001. The last problem to be solved is how to count the income of migrant workers.Migrant workers are excluded from the official household income survey sample, implying an overstatement of urban household income and an underestimation of rural household income.The sample design of the Urban Income Survey by the National Bureau of Statistics includes migrant workers who have lived in cities and towns for more than half a year, but in actual data collection, migrant workers in construction sites and service industries may have been ignored, and the latter may have never done urban temporary work. Population registration.According to a survey, 13% to 20% of the urban population in China today are migrant workers, and their average income level is 60% lower than that of urban workers (but 40% higher than that of rural residents).The omission of migrant workers from the statistics means that the estimated average income of urban households may be higher than it actually is.At the same time, rural survey teams may again exclude migrant workers who are not at home when conducting rural household income surveys, and migrant worker households may not truthfully report all repatriated income.Therefore, rural household income statistics may underreport the level of rural household income.Due to the large number of migrant workers in China, official income figures may exaggerate the urban-rural income gap. Let's look at the research done by Professor Terri Sikule and his collaborators at the University of Western Australia. "How Largeis China's Urban Rural Gap?", Terry Sicular, Yue Ximing, Bjorn Gustafsson, Li Shi, 2007, they try to adjust three of the above four main statistical problems.They found price data, calculated the real purchasing power of income, and used the data on the number of migrant workers and their income in each city to solve the statistical problem of migrant workers' income, and estimated housing income in urban areas.Adjustments were not made for urban public services and pensions due to lack of relevant data. Interestingly, after adjusting the data, they found that the urban-rural income gap was not as large as the official data suggested.They found that between 1995 and 2002, the urban-rural income ratio was stable between 2.24 and 2.27 times, while official data showed that the urban-rural income ratio exceeded three times.They also found that in 2002, the urban-rural gap accounted for only 25% of the total income gap, basically consistent with the conclusions of Benjamin et al.Even so, China's urban-rural wealth gap is still considerably higher than the average level of Asian developing countries, where the urban-rural income ratio is between 1.3 and 1.8 times, but it is also better than the official data, indicating that at least the rich and the poor The disparity is not getting worse as quickly as many think.However, it needs to be pointed out again that these analyzes are based on official survey statistics, which do not include all “gray income”, which is a common problem in urban and rural data. Benjamin and his co-authors point out that the greatest income inequality in China today occurs between urban populations and rural populations, not between urban and rural areas.This is an important distinction - if their conclusions hold, it will mean that we will need to re-examine current poverty reduction strategies. Income inequality manifests itself in two forms.One is the huge income gap between the eastern coastal rural areas and inland rural areas.Farmers in coastal areas such as Zhejiang and Jiangsu are relatively wealthy, and their agricultural operations are prosperous (at least in the 1980s). Farmers’ families have accumulated a certain amount of funds through early migration to cities; the situation of farmers in central and western regions is much worse, and some areas are very poor. poor. A second, more serious and thorny problem is income inequality within cities.In urban areas, income disparities between households living on the same street can be very large due to different resources at their disposal.According to Benjamin's analysis of the sample survey data of the National Bureau of Statistics, at this stage, wage income in urban areas accounts for 68% of the average income and 72% of the income gap.In other words, wages determine whether you are poor or rich, and wages depend on factors such as education, social connections, and opportunities.Rural areas also show the same trend.Wage income accounts for 42% of the average rural household income and 44% of the rural income gap.Whether a household engages in some business activities also has a large impact on its income—business income accounts for 21 percent of the average rural income and 29 percent of the income gap in rural areas.On the other hand, income from food cultivation accounts for 21% of the average rural income, but accounts for only 6% of the income gap.A very important issue is that since we live in a society where educational attainment is directly proportional to income level, if we are to address income inequality, we need to ensure that everyone has a fair right to education. Of course, as noted above, we cannot adjust for the effect of the value of public services and pensions enjoyed by urban residents on income.Sikule et al. also acknowledged the existence of this problem, but they were unable to find a solution due to lack of relevant data.Albert Park of Oxford University estimates that such benefits for urban dwellers are equivalent to a 30% increase in wages, which is a lot.At the same time, the burden of medical security for rural families is greater, and the quality of education cannot be compared with that of urban areas.This means that if the influence of these factors is taken into account, the income gap between urban and rural areas will be even greater. So, what conclusions can we draw?In short, there are the following points: There is clearly an imbalance between the income levels of rural and urban households.Official data show that the gap between the two has widened in recent years. However, if we adjust the income data considering the impact of living costs and other factors, we will find that the income gap between urban and rural areas is not as large as the official data show. Income disparities within cities and within rural areas have widened significantly over the past few years, as wages account for an increasing share of income. Access to public services varies widely across regions, and this clearly affects people's quality of life.Although rural areas have received more financial support in recent years, their public services in education, medical care and infrastructure construction are still far behind those in urban areas. In addition, there are still a large number of "grey incomes" in urban and rural areas, and there may be more "grey incomes" in urban areas, which exacerbates the income gap between urban and rural areas. While opinions differ on the issue of income inequality, there is largely consensus on policy measures to reduce income inequality.This is the next topic we will discuss. At present, the real poverty is mainly concentrated in rural areas, and there is no dispute about this.However, if one assumes that rural areas generally have lower incomes (an easy corollary of acknowledging urban-rural income inequality), the solution is simply to increase funding in all rural areas.In fact, the government has made great efforts in this regard in recent years.Measures to increase investment in rural areas are carried out in several areas.Here we look at the summary made by the relevant report of the World Bank. "Mi-term Evaluation of China's 11th Five Year Plan", March 2009 1. Rural cooperative medical insurance.As we will discuss in Chapter 6, the New Rural Cooperative Medical System has been widely rolled out in rural areas across the country, but funding is still insufficient.According to data, the current reimbursement rate for average hospitalization expenses is between 15% and 30%, and the remaining expenses still need to be borne by farmers themselves. 2. Increase agricultural subsidies.The central government has increased direct subsidies to grain farmers, increased the subsidy standards for improved seeds, expanded the scope of crop planting subsidies, increased subsidies for the purchase of agricultural machinery and tools on a large scale, and increased comprehensive subsidies for agricultural materials.At the same time, the scale of national grain procurement has increased five-fold since 2004. 3. Gradually reform the rural land system.In the past four or five years, rural households have been able to legally rent out farmland. According to a survey conducted by the World Bank in 2007, land income increased by 60% after cultivated land was allowed to be rented out.Two-thirds of the additional income is owned by the lessee (mainly for commercial farming), and one-third is obtained by the farmers who rent out the land (the farmers themselves usually go to work in cities to further increase their income). On the eve of the Third Plenary Session of the Seventeenth Central Committee of the Communist Party of China in October 2008, the central government seemed to be preparing to simplify relevant procedures, speed up the process of rural land transfers, and strengthen the protection of farmers' land rights.But it is not clear whether there has been a major change after the meeting. 4. Rural infrastructure construction.In recent years, the National Development and Reform Commission has increased investment in rural infrastructure construction.According to official statistics, half of rural households have access to piped water.Investment in rural power grid construction and road construction has been increased.According to official data, 15% of the current 4 trillion yuan government investment plan will be allocated for investment in infrastructure construction in rural areas.Total investment in agriculture and rural areas has nearly doubled from 3.4 billion yuan in 2005 to 6.1 billion yuan in 2008.However, investment in rural infrastructure remained at 9 percent of total government spending. At present, most of the government's support measures have achieved results, especially in improving the inequality in access to public services between urban and rural residents.But "sprinkling pepper noodles" type of investment may lead to a waste of financial resources.If it is true that income inequality within urban and rural areas is greater than that between urban and rural areas, careful planning is needed on where and how funds are invested.First of all, to find out the real poor people, it is necessary to conduct in-depth research on each family and find out the target to provide subsidies.Even the governments of developed countries have not been able to do this job successfully, but China has made positive progress in this regard. The specific implementation of China's poverty alleviation projects has improved. The minimum social security system covered all urban areas in 1999 and began to cover rural areas in 2007.This is quite an achievement.The minimum living allowance system determines low-income families through certain procedures (the standards vary in different regions), and regularly distributes a certain amount of living allowances.By the end of 2007, a total of 34.5 million people in rural areas had received subsistence allowances, receiving a cash subsidy of 70 yuan per month, and another 300,000 ultra-low-income groups could receive subsidies for extremely poor families, and the subsidy amount was gradually increasing. But the subsistence allowance system is not perfect.Du Yang, a researcher at the Institute of Population and Labor Economics of the Chinese Academy of Social Sciences, conducted a survey a few years ago. He found that 42% of households currently receiving subsistence allowances are actually not eligible, while 50% of all eligible families 49% did not receive subsidies.Lavare, a scholar of the World Bank, also discovered the problem of the deviation of the Dibao goal. "How Relevant is Targeting to the Success of an Antipoverty Program?", World Bank Research Observer 2009, he found from the income data of urban residents of the National Bureau of Statistics of China from 2003 to 2004 that only 29% of low-income families received government support. Transfer Payment.However, the Dibao system is very important for households receiving Dibao - without Dibao, 57% of low-income households live below the poverty line, and the implementation of the Dibao system has reduced this ratio to 45%. Similar problems exist with similar safeguard mechanisms in other countries, especially developing countries.Another problem is that low-income people who do not qualify for Dibao do not receive any subsidies, while recipients of Dibao receive an equal amount of subsidies regardless of their poverty level.In addition, some people worry that the subsistence allowance system lacks a mechanism to motivate recipients to re-employ, and worry that the phenomenon of "welfare supporting lazy people" (people who live on low insurance premiums give up looking for a job) will develop in China, reminding China to learn from developed countries such as the United States and Britain. Lessons from the state welfare system to prevent this phenomenon.However, it is too early for China to worry about the problem of "welfare supporting lazy people" given that most of the current subsistence allowances are only for low-income families and the amount is not high.However, at some point in the future, we need to pay attention to this issue. Dibao and similar social relief mechanisms are only expedient measures, not the fundamental solution to poverty. The fundamental solution to poverty eradication is to continuously increase the income level of workers.Here, education is key.Research by Luo Xubei from the World Bank and Zhu Nong from the University of Quebec in Canada found that education is a key factor in determining income levels. "Rising Income Inequality in China: A Race to the Top", 2008, they found that only 2% of China's population with a junior high school education or above lived below the official poverty line, while the national average population below the poverty line was 10%.This is basically consistent with the conclusions of studies around the world, which generally find that the longer the years of education, the higher the income. The Chinese government plans to implement free nine-year compulsory education throughout the country by 2010.No independent research report on the progress of the project has been seen so far.Official reports show that free compulsory education has made great progress, but some news from non-governmental channels is mixed: some areas have achieved remarkable results in popularizing free compulsory education, but in some areas, families still have to bear a certain amount of education costs.Official figures show that the enrollment rate of primary school-age children across the country has reached 99.5 percent, but there are still many unresolved issues.One is to ensure that children who enroll in rural areas complete their education—dropouts are still common, with students either dropping out of school to return home to help farmers, or to move to other cities with their migrant parents.Beijing has set up schools to provide compulsory education for children of migrant workers, but many other cities still impose barriers for children of migrant workers to enroll, including raising admission standards and increasing fees.In addition, families in rural areas often cannot afford other fees imposed by schools (besides those that are legally prohibited from indiscriminate fees).Another very serious problem is the health of children.A recent study found that malnutrition in children is causing serious problems with anemia and other diseases.This can cause children to be distracted in class and limit their ability to learn.Studies also show that in some parts of China, one in four students is malnourished, especially in some boarding schools with limited meal budgets.家长通常察觉不出这类问题，但加大教育投入将能在一定程度上改善这种状况。 我认为，下一步需要将免费义务教育延伸到高中阶段，覆盖至19～20岁年龄阶段。这就需要财政部多负担三年的义务教育开支。目前中国高中的收费水平是世界上最高的，每年费用约1100元，大大高于收费水平排名第二的国家（约340元）。因此，只有30%的农村学生进入普通高中，另外20%的学生选择职高或技校。而中国台湾地区的高中入学率在20世纪70年代就达到了100%。目前，财政部表示实行这项改革的资金不足。但归根结底，这是公共财政支出的选择问题。为了中国的长远发展考虑，应把教育投资摆在首要位置。少修几条公路，将更多支出投资于高等教育将对中国长期的人力资本财富增长产生巨大的推动作用。 根据官方数据，2007年中国共有4320万人生活在贫困线以下，其中1480万人属于“绝对贫困”人口。但我们需要对官方数据持谨慎态度，我认为官方数据或许低估了贫困问题。中国政府曾几次下调贫困线，低于贫困线的人口规模越来越小。目前中国制定的贫困线标准过低，如果以国际贫困线为准，中国贫困人口将达到8000万人。 据报道，国务院正在考虑将贫困线标准调整为国际通行的日收入低于1美元（以1993年美元汇率为基准计算美元的“购买力”），按年收入计算的话，贫困线将由1067元上调到1300元。虽然贫困人口翻番难免有些令人尴尬，但此举是一个明确的信号，表明中国政府将正视贫困问题，而且也会使扶贫减困工作的目标更为明确。综上所述，降低收入不平等应该是我们努力的方向。 欢迎来到新疆。新疆位于中国的西北，这里有全世界最优良的棉花，最明媚的阳光，最甘甜的西瓜，还有我所在的渣打银行支持的农户小额信贷项目。银行经济学家难得有机会来到农村，我十分有幸，于2008年夏天在新疆农村度过了一周时间，在棉花地头流连，和淳朴的棉农聊天。 我们的农户小额信贷项目规模不大，在新疆维吾尔自治区阿瓦提县开展。该项目在第一年为100个农户提供金额为10000元的小额信贷。原本我们计划的规模更大一些，可是等到所有手续齐备，项目终于可以启动时，已经错过了播种季节。这笔贷款的用途多种多样。棉花种植周期初始阶段需要现金购买种子和化肥等。还有提高生产效率的一次性支出，最常见的是犁田和播种使用的犁具和拖拉机。我访问的一位农民阿育普，用贷款买了一头牛，计划2009年继续贷款，换台拖拉机。另一位农民正计划送小女儿去乌鲁木齐念大学，边远乡村的孩子考上大学很不容易。一年的学费和生活费大概是7000元。这位父亲用贷款的大部分支付女儿上学的费用，秋天用农业收成来还贷。未来几年女儿上学的花销将占到他年收入的约70%，负担很重。