China’s Na­tional In­come Dis­tri­bu­tion in the New Nor­mal: Char­ac­ter­is­tics, Con­tra­dic­tions and Re­forms*

China Economist - - NEWS - 1 2 Liu Wei ( ) and Cai Zhizhou ( )刘伟 蔡志洲 1 Ren­min Univer­sity of China, Bei­jing, China 2 China Cen­ter for Na­tional Eco­nomic Growth and Ac­count­ing, Pek­ing Univer­sity, Bei­jing, China

Ab­stract:

This pa­per dis­cusses the evo­lu­tion and char­ac­ter­is­tics of China’s na­tional in­come dis­tri­bu­tion struc­ture af­ter the dawn of the new cen­tury and par­tic­u­larly in China’s new nor­mal of so­cial and eco­nomic de­vel­op­ment. This pa­per casts light on the pro­found na­tional in­come dis­tri­bu­tion and redis­tri­bu­tion ef­fects of changing own­er­ship and eco­nomic re­forms, as well as the mi­cro­scopic house­hold in­come dis­tri­bu­tion ef­fects of changes in macro­scopic dis­tri­bu­tion struc­ture. Based on an anal­y­sis of changes in macro­scopic dis­tri­bu­tion pat­tern, this pa­per ex­plains the struc­tural con­tra­dic­tions of na­tional in­come dis­tri­bu­tion in China and their ef­fects on China’s econ­omy, pro­vid­ing a the­o­ret­i­cal anal­y­sis of in­come dis­tri­bu­tion for deep­en­ing sup­ply-side struc­tural re­form.

Key­words:

sup­ply-side struc­tural re­form, macro dis­tri­bu­tion of na­tional in­come, in­come dis­tri­bu­tion struc­ture

JEL Clas­si­fi­ca­tion Codes: D31, E25, O47, P24

DOI: 10.19602/j.chi­nae­conomist.2018.03.01

As China’s econ­omy en­tered the new nor­mal, China has ini­ti­ated sup­ply-side struc­tural re­forms as a long-term, fun­da­men­tal and strate­gic ini­tia­tive to trans­form its de­vel­op­ment pat­tern and im­ple­ment new de­vel­op­ment con­cepts in the face of op­por­tu­ni­ties and chal­lenges aris­ing from changing do­mes­tic and in­ter­na­tional sit­u­a­tions. Sup­ply-side struc­tural re­forms re­quire sys­tem­atic trans­for­ma­tions at all lev­els, in­clud­ing de­vel­op­ment con­cepts and pat­terns, cor­po­rate com­pet­i­tive­ness, mar­ket mech­a­nisms to en­sure fair com­pe­ti­tion, in­dus­trial or­ga­ni­za­tion and struc­ture, re­gional struc­ture and bal­anced de­vel­op­ment, macroe­co­nomic reg­u­la­tion and pol­icy-mak­ing. Among sup­ply-side struc­tural re­forms that in­volve ev­ery facet of so­cial and eco­nomic life, im­prov­ing na­tional in­come dis­tri­bu­tion is of the ut­most sig­nif­i­cance.

First, com­pared with de­mand-side stim­u­lus, sup­ply-side so­lu­tion is a more fun­da­men­tal ap­proach for con­trol­ling and mit­i­gat­ing sup­ply-de­mand dis­e­qui­lib­rium. In nature, ag­gre­gate sup­ply is val­ueadded that is newly cre­ated in the econ­omy, i.e. gross na­tional prod­uct (GNP) or gross na­tional in­come (GNI). In this sense, ag­gre­gate sup­ply equals la­bor com­pen­sa­tion and var­i­ous sur­pluses, which can be de­com­posed into cor­po­rate sur­plus and gov­ern­ment tax in­come, i.e. “v+m”. Sup­ply-side struc­tural re­forms are in­tended to ad­dress the prob­lems of na­tional in­come dis­tri­bu­tion.

Sec­ond, given the in­trin­sic sup­ply-de­mand cor­re­la­tion, slug­gish ag­gre­gate de­mand can be at­trib­uted to a mul­ti­tude of fac­tors - the most im­por­tant be­ing the im­bal­ance ( even po­lar­iza­tion) of na­tional in­come dis­tri­bu­tion at sup­ply side. This has led to the cycli­cal rel­a­tive over­sup­ply and eco­nomic cri­sis

of cap­i­tal­ism ex­plained in Karl Marx’s Das Kap­i­tal1. De­spite its fun­da­men­tal dif­fer­ence from cap­i­tal­ist economies, in­suf­fi­cient do­mes­tic de­mand that emerged in China’s new nor­mal is largely cor­re­lated with dis­torted in­come dis­tri­bu­tion. What ap­pears to be in­suf­fi­cient de­mand is es­sen­tially in­come dis­tri­bu­tion dis­tor­tion at the sup­ply side. In ad­di­tion to stim­u­lat­ing ag­gre­gate de­mand, there­fore, im­prov­ing sup­ply­side na­tional in­come dis­tri­bu­tion is also of great rel­e­vance.

Third, as a ba­sic el­e­ment of ag­gre­gate sup­ply, na­tional in­come dis­tri­bu­tion is linked to a host of other sup­ply-side struc­tural con­tra­dic­tions. The for­ma­tion and change of sec­toral, re­gional and ur­ban­rural struc­tures of na­tional in­come dis­tri­bu­tion at the macro level, to­gether with house­hold dis­pos­able in­come gaps and their ad­just­ment at the mi­cro level, will fun­da­men­tally in­flu­ence a se­ries of struc­tural evo­lu­tions, in­clud­ing in­vest­ment struc­ture, in­dus­trial struc­ture, cor­po­rate cost struc­ture and con­sumer spend­ing struc­ture. Deep­en­ing sup­ply-side struc­tural re­forms re­quires struc­tural im­prove­ment to na­tional in­come dis­tri­bu­tion2.

1. For­ma­tion of the So­cial­ist Sys­tem and Pri­mary Na­tional In­come Dis­tri­bu­tion

China’s tran­si­tion from a planned econ­omy to a mar­ket- based one has trans­formed re­source al­lo­ca­tion. Un­der dom­i­nant pub­lic own­er­ship that co­ex­ists with other own­er­ship sys­tems, China has also de­vel­oped a dis­tri­bu­tion sys­tem where dis­tri­bu­tion ac­cord­ing to la­bor co­ex­ists with other forms of in­come dis­tri­bu­tion. Fac­tors that im­pact na­tional in­come dis­tri­bu­tion in­clude not only la­bor but other fac­tors such as cap­i­tal, tech­nol­ogy, prop­erty and man­age­ment. Aside from la­bor in­come, house­hold in­come also in­cludes in­comes from var­i­ous pri­vately-owned pro­duc­tion fac­tors. Such trans­for­ma­tions in own­er­ship, eco­nomic and dis­tri­bu­tion sys­tems led to pro­found changes in China’s in­come dis­tri­bu­tion pat­tern3.

Be­tween 2004 and 2013, China con­ducted three rounds of na­tional eco­nomic cen­sus to ac­quire ex­ten­sive eco­nomic, so­cial and en­vi­ron­men­tal data, par­tic­u­larly classified data of firms in dif­fer­ent cat­e­gories, na­tional eco­nomic ac­count­ing and em­ploy­ment. The data in­di­cate that dur­ing the third eco­nomic cen­sus, China’s eco­nomic ag­gre­gate in­creased re­mark­ably (with an an­nual av­er­age eco­nomic growth rate of around 10%). Rapid eco­nomic growth went hand-in-hand with changing eco­nomic struc­ture. As can be seen from the data of na­tional eco­nomic ac­count­ing and par­tic­u­larly cash flow sheet, China’s changing na­tional in­come dis­tri­bu­tion and redis­tri­bu­tion over the past decade ex­hib­ited the fol­low­ing char­ac­ter­is­tics:

First, sig­nif­i­cant struc­tural changes oc­curred in the shares of in­sti­tu­tional sec­tors in the pri­mary dis­tri­bu­tion of value-added (GDP) and to­tal in­come.

In na­tional eco­nomic ac­count­ing, th­ese in­sti­tu­tional sec­tors are classified into non- fi­nan­cial cor­po­rate sec­tor, fi­nan­cial sec­tor, house­hold sec­tor and gov­ern­ment sec­tor ac­cord­ing to in­come and spend­ing en­ti­ties and their in­come dis­tri­bu­tion char­ac­ter­is­tics. Such clas­si­fi­ca­tion is re­ferred to as the clas­si­fi­ca­tion of in­sti­tu­tional sec­tors. Af­ter pri­mary dis­tri­bu­tion, the shares of in­sti­tu­tional sec­tors in in­come dis­tri­bu­tion will change rel­a­tive to their shares in GDP be­fore pri­mary dis­tri­bu­tion. This is due to their dif­fer­ent in­come and spend­ing be­hav­iors re­lated to the use of pro­duc­tion fac­tors. Gen­er­ally, non-fi­nan­cial cor­po­rate sec­tor and fi­nan­cial sec­tor ac­count for smaller shares given their pos­i­tive net fac­tor ex­pen­di­tures, i.e. neg­a­tive net fac­tor in­come. Gov­ern­ment and house­hold sec­tors ac­count for in­creas­ing shares due to pos­i­tive fac­tor net in­come, i.e. neg­a­tive net fac­tor ex­pen­di­ture. In 2013, non­fi­nan­cial cor­po­rate sec­tor ac­counted for the great­est share (about 60%) of value-added, while house­hold sec­tor ac­counted for a smaller share (less than 30%). Af­ter pri­mary dis­tri­bu­tion, house­hold sec­tor

ac­counted for the high­est share (about 60%), while the share of non-fi­nan­cial cor­po­rate sec­tor dropped to ap­prox­i­mately 20%.

Gov­ern­ment and house­hold sec­tors ac­counted for fall­ing shares of GDP over the past decade (2004-2013), with the share of gov­ern­ment sec­tor down from over 10% to less than 5% and the share of house­hold sec­tor down from 28% to less than 22%. In con­trast, the share of non-fi­nan­cial cor­po­rate sec­tor rose from over 58% to al­most 65%, and the share of fi­nan­cial sec­tor in­creased from less than 4% to al­most 11%. Th­ese changes are as­so­ci­ated with dif­fer­ences in the de­vel­op­ment of eco­nomic sec­tors with var­i­ous own­er­ship sys­tems. Growth in gov­ern­ment em­ploy­ees’ com­pen­sa­tion out­paced by eco­nomic growth and growth in in­di­vid­ual econ­omy out­paced by over­all cor­po­rate sec­tor growth re­spec­tively led to the fall­ing shares of gov­ern­ment and house­hold sec­tors. The in­creas­ing share of non-fi­nan­cial en­ter­prises is man­i­fested in the rapid de­vel­op­ment of man­u­fac­tur­ing en­ter­prises. Their de­vel­op­ment is also man­i­fested in the fast-grow­ing share of fi­nan­cial in­sti­tu­tions’ in­come and in­creas­ing de­pen­dence of eco­nomic growth on fi­nan­cial in­sti­tu­tions (see Ta­ble 1). Over­all, th­ese struc­tural changes are pos­i­tive, and mar­ket- based re­forms give play to the role of pro­duc­tion fac­tor in­cen­tives, thus boost­ing pro­duc­tiv­ity in the pro­duc­tion (sup­ply) sec­tor, par­tic­u­larly the de­vel­op­ment of non-fi­nan­cial en­ter­prises. On the other hand, we may also no­tice that in the tran­si­tion process, cer­tain ad­just­ments (such as gov­ern­ment em­ploy­ees’ com­pen­sa­tion) did not keep pace with the mar­ket, and some sec­tors (such as fi­nan­cial sec­tor) prac­ticed pro­tec­tive mo­nop­oly at the ex­pense of other sec­tors, which is un­fair and com­pro­mises ef­fi­ciency.

This ta­ble com­pares the shares of value-added and GDP be­fore and af­ter pri­mary dis­tri­bu­tion. As can be seen from the ta­ble, the most no­tice­able change is the share of non-fi­nan­cial cor­po­rate sec­tor’s in­come from pri­mary dis­tri­bu­tion, which de­creased by a wider margin com­pared with its share in GDP (up from around 36% in 2004 to about 41% in 2013). Ac­cord­ingly, the share of house­hold sec­tor in­creased by a wider margin (up from around 30% in 2004 to about 36% in 2013). The shares of gov­ern­ment and fi­nan­cial sec­tors changed slightly in dif­fer­ent di­rec­tions. The tran­si­tion from pro­duc­tion process to pri­mary dis­tri­bu­tion re­flects an in­crease in the trans­fer of fac­tor in­come and par­tic­u­larly non-la­bor fac­tor in­come be­tween in­sti­tu­tional sec­tors. This rep­re­sents a change to the eco­nomic struc­ture brought about by the de­vel­op­ment of dif­fer­ent own­er­ship sys­tems af­ter own­er­ship re­form.

Sec­ond, sig­nif­i­cant changes have oc­curred in the size of China’s prop­erty in­come and ex­pen­di­ture, as well as their share in the econ­omy due to changing prop­erty sys­tem stem­ming from changing own­er­ship struc­ture. Th­ese changes have in­flu­enced the struc­ture of pri­mary dis­tri­bu­tion in im­por­tant ways.

Un­der so­cial­ist mar­ket econ­omy, as­sets as an im­por­tant pro­duc­tion fac­tor can­not be used free of charge in the pro­duc­tion process. As­set users must pay rel­e­vant costs ac­cord­ing to com­pet­i­tive mar­ket­based stan­dards, and as­set own­ers thus re­ceive prop­erty in­come. In this man­ner, in­ter­nal and mu­tual prop­erty in­comes and ex­pen­di­tures among in­sti­tu­tional sec­tors are in­curred. Af­ter var­i­ous fac­tor in­comes and ex­pen­di­tures, i.e. pri­mary dis­tri­bu­tion, GDP (“do­mes­tic ag­gre­gate” of the value-added gen­er­ated by var­i­ous in­sti­tu­tional sec­tors) is formed into gross na­tional in­come (GNI) (“do­mes­tic ag­gre­gate” of to­tal

4 in­come from the pri­mary dis­tri­bu­tion of var­i­ous in­sti­tu­tional sec­tors) (see Ta­ble 2).

Dur­ing 2004- 2013, prop­erty in­come and ex­pen­di­ture as a share in to­tal fac­tor in­come and ex­pen­di­ture changed the most promi­nently, up 8.1% and 7.4% re­spec­tively. This im­plies prop­erty’s stronger po­si­tion as a pro­duc­tion fac­tor in the econ­omy and pri­mary dis­tri­bu­tion. The shares of other fac­tors’ in­comes and ex­pen­di­tures in­clud­ing la­bor com­pen­sa­tion and pro­duc­tion tax in­creased slightly. The share of la­bor com­pen­sa­tion in­come and ex­pen­di­ture in­creased by about 4%, in­di­cat­ing im­proved la­bor in­come from pri­mary dis­tri­bu­tion. The share of net pro­duc­tion tax de­creased by more than 2%, in­di­cat­ing the pri­mary dis­tri­bu­tion ef­fect of gov­ern­ment tax cut pol­icy in pro­duc­tion sec­tors. Changing prop­erty in­comes and ex­pen­di­tures are a man­i­fes­ta­tion of the en­try of pub­lic and non-pub­lic as­sets as ex­clu­sive pro­duc­tion fac­tors into the mar­ket, with an in­creas­ingly im­por­tant role in na­tional pro­duc­tion. Ac­cord­ingly, as­sets played an in­creas­ingly im­por­tant role in pri­mary na­tional in­come dis­tri­bu­tion.

Over­all, the share of non-fi­nan­cial cor­po­rate sec­tor (en­ter­prises) in the net ex­pen­di­tures on as­sets sig­nif­i­cantly in­creased. Ac­cord­ingly, the shares of net prop­erty in­comes of gov­ern­ment and house­hold sec­tors in­creased5 (see Ta­ble 3). Non-fi­nan­cial cor­po­rate sec­tor has the high­est net prop­erty ex­pen­di­ture, which is equiv­a­lent to the sum of net prop­erty in­comes of gov­ern­ment and house­hold sec­tors. This

in­di­cates that in their de­vel­op­ment process, China’s non-fi­nan­cial en­ter­prises in­creas­ingly rely on other sec­tors for fi­nanc­ing (via fi­nan­cial in­sti­tu­tions or direct fi­nanc­ing). Their in­creas­ing fi­nan­cial lever­age re­sulted in grow­ing prop­erty ex­pen­di­ture cost and ris­ing fi­nan­cial risks.

Land rent changed the most in gov­ern­ment sec­tor’s prop­erty in­come. As can be seen from the data in Ta­ble 4, land rent ac­counted for 50% of gov­ern­ment net prop­erty in­come in 2013. This led to a great change in the share of gov­ern­ment net prop­erty in­come in to­tal in­come, par­tic­u­larly its share in pri­mary in­come dis­tri­bu­tion. In­ter­est in­come is a ma­jor source of house­hold prop­erty in­come. De­spite cer­tain in­ter­est ex­pen­di­ture, house­hold sec­tor’s net in­ter­est is still pos­i­tive, and in­ter­est in­come is even greater. An­other source of prop­erty in­come for gov­ern­ment and house­hold sec­tors is div­i­dend in­come, and gov­ern­ment sec­tor’s div­i­dend in­come is sig­nif­i­cantly greater than house­hold sec­tor’s. This im­plies that de­spite the fall­ing share of state sec­tor of econ­omy (in­clud­ing the num­ber of en­ter­prises, em­ploy­ment, pro­duc­tion and in­vest­ment, among oth­ers), its div­i­dend con­tri­bu­tion to the as­set owner (gov­ern­ment) is far higher than that of pri­vate sec­tor to house­holds as as­set own­ers. To some ex­tent, this re­flects the dif­fer­ence be­tween the state sec­tor and the pri­vate sec­tor of the econ­omy re­gard­ing in­come dis­tri­bu­tion. Over the years of its de­vel­op­ment, the pri­vate sec­tor of the econ­omy re­tained most of prof­its in firms, with a rather small por­tion of prof­its dis­trib­uted to the house­hold sec­tor6.

For the house­hold sec­tor, there­fore, in­ter­est in­come rather than div­i­dend in­come is a key de­ter­mi­nant of its prop­erty in­come. For in­stance, the share of house­hold sec­tor’s net prop­erty in­come in pri­mary dis­pos­able in­come rose from 2.8% in 2004 to 4% in 2013. While this in­crease ap­pears to be rather small, in­ter­est in­come and ex­pen­di­ture are of dif­fer­ent nature in house­hold in­come. In­ter­est in­come mainly comes from house­hold sav­ings or other fi­nan­cial lend­ing ac­tiv­i­ties (such as the pur­chase of trea­sury bonds and cor­po­rate bonds), and the in­crease of in­ter­est spend­ing re­flects rapid in­creases in hous­ing mort­gage loans and as­so­ci­ated in­ter­est ex­pen­di­tures in China over the re­cent years. While the for­mer is in­come from house­hold prop­erty, the lat­ter is ex­pen­di­ture aris­ing from house­hold con­sump­tion (hous­ing in­vest­ment). In fact, such ex­pen­di­ture is part of cur­rent con­sump­tion, but is classified as prop­erty ex­pen­di­ture due to the nature of hous­ing loan. From the per­spec­tive of to­tal prop­erty in­come, the share

of house­hold sec­tor’s prop­erty in­come in to­tal in­come from pri­mary dis­tri­bu­tion in­creased by about 6.2%. To­tal prop­erty in­come and net prop­erty in­come should be ex­am­ined in com­bi­na­tion to bet­ter ex­plain the de­gree of non-la­bor com­pen­sa­tion’s im­pact on house­hold in­come from pri­mary dis­tri­bu­tion.

Third, with deep­en­ing re­forms of so­cial­ist mar­ket eco­nomic sys­tem with Chi­nese char­ac­ter­is­tics and la­bor fac­tor mar­ket de­vel­op­ment, dif­fer­ent changes have oc­curred in la­bor com­pen­sa­tion un­der dif­fer­ent forms of own­er­ship.

Based on data from China’s na­tional eco­nomic ac­count­ing, China’s la­bor com­pen­sa­tion as a share in GDP kept on the in­crease year by year (as op­posed to fall­ing be­fore 2008), even­tu­ally ex­ceed­ing 50% in 2013 (50.8%), in­di­cat­ing an in­creas­ingly stronger po­si­tion of la­bor fac­tor in the pri­mary dis­tri­bu­tion of na­tional in­come. This im­plies that China’s dis­tri­bu­tion sys­tem dom­i­nated by dis­tri­bu­tion ac­cord­ing to la­bor with var­i­ous co­ex­ist­ing dis­tri­bu­tion meth­ods will ul­ti­mately in­crease the share of la­bor in­come in pri­mary dis­tri­bu­tion, and the de­gree of such in­crease is largely de­pen­dent on changes in the la­bor mar­ket sup­ply-de­mand re­la­tion­ship. In the pri­mary dis­tri­bu­tion of house­hold sec­tor, la­bor com­pen­sa­tion ac­counts for 84.5% of house­hold pri­mary in­come dis­tri­bu­tion, in­di­vid­ual econ­omy in­come ac­counts for 11.5%, and prop­erty in­come ac­counts for 6.2%. La­bor com­pen­sa­tion re­mains the most im­por­tant source of in­come for the house­hold sec­tor.

La­bor com­pen­sa­tion changed dif­fer­ently un­der dif­fer­ent forms of own­er­ship. Ac­cord­ing to the Third Na­tional Eco­nomic Cen­sus, the work­force re­ceiv­ing la­bor com­pen­sa­tion can be classified into the fol­low­ing four cat­e­gories7. First, the work­force of SOEs, in­clud­ing SOEs, col­lec­tive en­ter­prises, solely state-funded com­pa­nies and SOEs in fi­nan­cial sec­tor, whose in­come is con­sis­tent with the prin­ci­ple of “dis­tri­bu­tion ac­cord­ing to la­bor” un­der tra­di­tional pub­lic own­er­ship (how­ever, cur­rent dis­tri­bu­tion stan­dards are de­ter­mined with ref­er­ence to mar­ket stan­dards in most cases, rather than en­tirely reg­u­lated by the gov­ern­ment). Such work­force ac­counts for about 10% of the to­tal work­force.

The sec­ond cat­e­gory is the work­force of pri­vate en­ter­prises, in­clud­ing pri­vate en­ter­prises, en­ter­prises solely funded by in­vestors from Hong Kong, Ma­cao and Tai­wan, and 100% for­eign-funded en­ter­prises. Their la­bor com­pen­sa­tion is paid by busi­ness own­ers. Es­sen­tially, such work­force is em­ployed la­bor with mar­ket-based pric­ing. This type of work­force ac­counts for more than 20% of the to­tal work­force.

The third cat­e­gory is in­di­vid­ual busi­ness own­ers (small pri­vate econ­omy), in­clud­ing self-em­ployed busi­ness own­ers and the work­force of the pri­mary in­dus­try. In na­tional eco­nomic ac­count­ing, such

work­force is classified as the self-em­ployed work­force, and ac­counts for more than 40% of the to­tal work­force8.

The re­main­ing less than 30% of the work­force is em­ployed in var­i­ous types of mixed-own­er­ship en­ter­prises, with most em­ployed in the non- pub­lic econ­omy. Although the work­force of pub­licly owned in­sti­tu­tions ac­counts for about 10% of the to­tal work­force, la­bor com­pen­sa­tion in pub­lic sec­tor ac­counts for no more than 15%, given that pub­lic sec­tor’s av­er­age la­bor com­pen­sa­tion is only slightly above the av­er­age la­bor com­pen­sa­tion, among other con­sid­er­a­tions. The re­main­ing over 85% of la­bor com­pen­sa­tion is fun­da­men­tally dif­fer­ent com­pared with that in the tra­di­tional planned econ­omy in terms of nature and pric­ing method. Changing com­po­si­tion of the work­force took place amid China’s tran­si­tion from the tra­di­tional planned econ­omy to a mar­ket-based one, and is com­pat­i­ble with China’s ba­sic sys­tem of dom­i­nant pub­lic own­er­ship co­ex­ist­ing with other own­er­ship sys­tems. It is nei­ther a re­flec­tion of tra­di­tional pub­lic own­er­ship and its forms of re­al­iza­tion nor a re­flec­tion of em­ployed la­bor to­tally un­der pri­vate own­er­ship.

2. De­vel­op­ment of So­cial­ist Mar­ket Eco­nomic Sys­tem and Changes in Na­tional In­come Redis­tri­bu­tion

On the ba­sis of pri­mary in­come dis­tri­bu­tion of var­i­ous in­sti­tu­tional sec­tors, the steps of na­tional in­come redis­tri­bu­tion and cur­rent trans­fer in­come and spend­ing redis­tri­bu­tion are also re­quired to form the dis­pos­able in­comes of in­sti­tu­tional sec­tors for the fi­nal use of na­tional in­come for in­vest­ment, sav­ings, con­sump­tion, etc. (see Ta­ble 5).

Cur­rent trans­fer in­comes and pay­ments in­clude: (1) Or­di­nary taxes such as in­come tax and prop­erty tax, in­clud­ing cor­po­rate in­come tax, per­sonal in­come tax and prop­erty tax im­posed on busi­nesses and house­holds (dur­ing 2004-2013, China’s or­di­nary tax in­come as a share in gov­ern­ment dis­pos­able in­come in­creased from 14.8% to 26.3%). (2) So­cial in­surance con­tri­bu­tions (so­cial in­surance con­tri­bu­tions as a share in the gov­ern­ment sec­tor’s dis­pos­able in­come in­creased from 17.6% to 32.6% dur­ing 2004-2013). (3) So­cial in­surance ben­e­fits re­ceived by house­holds from the gov­ern­ment (its share in gov­ern­ment dis­pos­able in­come in­creased from 14% to 26% dur­ing 2004-2013, while its share in the house­hold sec­tor’s dis­pos­able in­come in­creased from 5% to 8%). (4) So­cial re­lief pro­vided by the gov­ern­ment to the un­der­priv­i­leged (this spend­ing ac­counted for 9% of gov­ern­ment dis­pos­able in­come in 2013, reach­ing 989.96 bil­lion yuan. This, to­gether with re­lief pro­vided by the cor­po­rate sec­tor in the amount of 19.13 bil­lion yuan, means that the house­hold sec­tor re­ceived over one tril­lion yuan in re­lief funds in 2013). (5) Other cur­rent trans­fers, which are pri­mar­ily non-fac­tor-re­lated cur­rent trans­fers be­tween house­holds and from firms to house­holds, such as re­lief funds of­fered by firms to house­holds and do­na­tions among house­holds. As can be seen from the com­po­si­tion, cur­rent trans­fer oc­curs af­ter the pro­duc­tion process, and is not re­lated to any pro­duc­tion fac­tor. It is mainly con­ducted by the gov­ern­ment to reg­u­late the in­comes of firms and in­di­vid­u­als in ac­cor­dance with rel­e­vant laws and reg­u­la­tions to ad­just in­come dis­tri­bu­tion dif­fer­ences and im­prove so­cial se­cu­rity.

As the above anal­y­sis shows, China’s na­tional in­come redis­tri­bu­tion took on new char­ac­ter­is­tics with changing own­er­ship struc­ture and mar­ket-based re­source al­lo­ca­tion mech­a­nism. First, in­come tax rep­re­sents a grow­ing share in gov­ern­ment dis­pos­able in­come. Sec­ond, as the bur­den of so­cial pro­tec­tion be­comes par­tially trans­ferred from gov­ern­ment to cor­po­rate and house­hold sec­tors, gov­ern­ment sur­pluses can be used to cre­ate con­di­tions for im­prov­ing fu­ture so­cial pro­tec­tion. Third, as gov­ern­ment

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