China's growing income gap is likely to trigger social instability after 2010 if the government finds no effective solutions to end the disparity.

An expert team at the Ministry of Labour and Social Security recently delivered the warning in a newly designed system detailing the populous country's statistics for income distribution.

Calling upon the government to keep alert over growing income disparities, the team found that the income gap in China has been expanding since 2003, despite some measures in place to increase income among those in poverty.

The team, headed by Su Hainan, president of the ministry's Income Research Institute, has used "blue-, green-, yellow- and red-lights" to predict income disparity trends. The yellow light warns the government to be alert and the red one means the disparity is totally unacceptable.

"Income disparity in China is in the yellow-light area now," the team warned. "We are going to hit the red-light scenario after 2010 if there are no effective solutions in the next few years.

Su's team found little reason to be optimistic about bridging the urban-rural income gap. Incomes in cities are growing at 8-9 per cent annually, while the rate in rural regions has averaged a year-on-year growth of 4-5 per cent.

The National Bureau of Statistics forecasted over the weekend that per capita urban income this year is likely to surpass 10,000 yuan (US$1,234).

Last year, the average annual income for rural residents reached 2,936 yuan (US$355), far behind that of urban residents, whose average annual income was 9,422 yuan (US$1,139) in 2004.

The team found that income disparity in rural areas is very close to the "red light." Average farmers earned 3.39 times as much as officially-designated poor farmers in 2004. In 1992, the disparity was only 2.45 times as much.

"The government's top priority is to make those farmers still in poverty earn more," the team concludes in a report.

A gap also exists among the urban residents. "And the gap is growing," added Xu Fengxian, a researcher with the Chinese Academy of Social Sciences.

He said incomes of laid-off workers are decreasing while the wallets of private business owners have been fattening at incredible rates.

The government has already become concerned by the growing income disparity.

(China Daily August 22, 2005)