Beijing Official Fights to Curb Income Disparities

CHINA'S new Communist Party chief, Jiang Zemin, likes to rouse audiences with images of steel workers toiling over blast furnaces and other heroic deeds of the Chinese ``working class.'' Since becoming party general secretary in June, Mr. Jiang has lined up for lunch with workers at a machine-tool plant and toured a steel mill. The former Shanghai party secretary apparently seeks to portray himself as a champion of common workers, while distancing himself from his predecessor, Zhao Ziyang, who is under attack for advocating ``elite'' rule.

It is not surprising, then, that Jiang, an electrical engineer trained at Moscow's Stalin Automobile factory, has pledged to redistribute income to low-paid state workers during his tenure in office.

``We should admit that corruption and a wide gap in income are the focuses of strong resentment on the part of the broad masses of people,'' Jiang wrote in last week's official Beijing Review magazine. ``Steep income disparities seriously dampen the enthusiasm and initiative of the large majority of workers,'' he added.

Jiang's drive to curb income disparities is aimed at appeasing millions of workers at state-run factories and government institutions, whose resentment over falling relative living standards fueled last spring's nationwide protests, Western diplomats say.

``It's an attempt to deflect some of the anger away from the government and exploit some of the dissatisfaction,'' said one diplomat, who spoke on condition of anonymity. ``It's a divide-and-conquer strategy.''

However, Beijing's plans to restrict differences in pay threaten to seriously dampen worker incentives and set back a decade of market-oriented economic reforms, diplomats say.

The government is currently drafting new regulations to limit growing income gaps both between the stagnant state and flourishing private sectors and within individual factories, say Chinese officials involved in the effort.

The rules will impose new taxes on the incomes of private entrepreneurs whose mushrooming wealth has generated ``hong yan bing,'' meaning ``red eye disease'' or jealousy, among state workers, officials say. Many private business people earn more than 10 times the average yearly wage of state-sector employees, according to official estimates.

China's Cabinet, the State Council, announced this week that by the end of October it will wage a nationwide campaign to investigate the country's 14.5 million private businesses for tax evasion and other illegal activities. The government reported last week that it expects to raise $3.2 billion in taxes from self-employed business people this year, 30 percent more than last year.

``So long as business people observe the law, it will be hard for them to reap staggering profits,'' Jiang stated.

Within factories, the new regulations will aim at limiting the wage ratio between managers and workers to 3 to 1 or less, according to Chen Ji, an official at the party-controlled All-China Federation of Trade Unions. He said that in some factories the ratio had risen to 100 to 1.

Chinese officials acknowledge, however, that the moves to curtail high incomes may foster apathy among workers and entrepreneurs.

``We want them to be enthusiastic - but we don't want them to earn too much. It's a big problem,'' says Mr. Chen.