Rectifying Income Redistribution in China: Homogenising Public Service Provision or Tax Regulation?

Abstract

Currently the labour income ratio in China is normal relative to its economic
development; the income differential between industries requires solutions from the
continuing establishment of a market economic system and the reduction of
monopolistic practices. The important income redistribution issues that require public
finance mechanisms are geographic differences and urban / rural differences. Both
theory and practice have evidenced that using tax mechanisms to adjust income
distribution is ineffective. The most effective path to solve the issue of unequal income
distribution is to gradually implement public service provision homogenisation.
Further, through political means, changing the factors of production flow asymmetry
arising from economic globalisation will also play an important role.
Undoubtedly unequal income distribution is the issue that receives the most attention
in China today. This paper proposes new ideas for research consideration, in relation
to the reasons of and rectification solutions to the unequal income distribution in
China.