Analysis of Governmental Action in the Distribution of Personal Income During the Marketization Reform

Abstract

Since the reform of the economic system, important changes have taken place in the distribution setup of national income in China. The proportion of individual income has markedly increased and the proportion of government fiscal revenue has markedly diminished. Inequalities of income distribution are becoming increasingly prominent in the distribution of personal income, and the channels of income are becoming progressively more diversified. Such major changes in income distribution are, to an increasing extent, affecting China's national economic development, and embody a change in the mechanism of income distribution, that is, a change from the planned-economy pattern of income distribution to a socialist market economy pattern. The marketization reform of the distribution of personal incomeâan important component of income distributionâhas also had a distinct role in promoting economic development; it has improved the efficiency of resource allocation and promoted the development of the social forces of production. However, absolutely free and uncontrolled distribution of income could intensify and expand unreasonable income disparities among the various [social] strata, and the widening of such unreasonable income disparities could affect social peace and stability. Many countries, therefore, adopt comparatively free income distribution models that come under government regulation and control. Our country is implementing a socialist market economy system, as against an absolutely free market economy system, and government regulation and control over personal income distribution is especially necessary. (Note: all further references to income distribution will indicate "distribution of personal income.")