China wants wage-earners to rake in more property income

Source: Xinhuanet | 10-17-2007 09:54

BEIJING, Oct. 16 (Xinhua) -- It is a good news that the Chinese government will facilitate financial innovations to give the average people more opportunities of gleaning more proceeds from asset investment, senior financial officials and corporate executives said here on Tuesday.

Shang Fulin, chairman of the China Securities Regulatory Commission, said his eyes were widened as soon as he heard the words "property income" in Hu Jintao's keynote speech at the start of the 17th National Congress of the Communist Party of China on Monday morning.

"Conditions would be created to enable citizens to have property income so as to increase the income of the urban and rural residents," Hu said.

Shang interpreted Hu's remarks as an important message that China would "actively advance the healthy development of capital market, making the vast number of investors to share in the economic boom fairly and equally".

China's economic takeoff with annual growth rate tripling the world's average for about three decades has bulged the pockets of Chinese people and lifted up their aggregated bank deposits to somewhere around 15 trillion yuan (two trillion U.S. dollars).

As the country's stock markets turned into a bull run since last year from a four-year stagnancy, more than 120 million people, about 10 percent of its population, had opened accounts on Shenzhen and Shanghai stock markets by early October.

Fund companies which now hold more than 90 million accounts have seen their total assets exceed three trillion yuan, while the combined equity market capitalization of domestic bourse surpassed25.32 trillion yuan (3.37 trillion U.S. dollars), taking up about 5.7 percent of the world's total.

Shang attributed the boom to shareholder reforms initiated in 2005 to float non-tradable state-own shares, the crackdown upon insider trading and the clean-up and rectification of the securities sector.

Driven by banking and coal mining shares, the country's benchmark Shanghai Composite Index closed at 6092.06 points on Tuesday, the second high in two days.

Jiang Jianqing, board chairman with the Industrial and Commercial Bank of China and delegate to the congress, said it is the first time that the ruling Communist Party explicitly blends such a message in a keynote political document, which is expected to set the tune for the country's development strategy in the coming years.

"The word bears a striking feature of the times as more and more people realize that wealth accumulation is to retain and increase the value of assets," aid Wu Yan, board chairman of the People's Insurance Company (Group) of China.

Although China began economic reform and opening-up policies 29years ago, its financial market remains relatively closed and fragile. The Chinese are also less financially sophisticated in comparison with those in developed countries. Many Chinese are used to accumulating wealth through working and bank savings.

Chen Xiaolong, an official with the National Bureau of Statistics (NBS), said that property income--referring to the capital gains from bank deposits, securities real estate, automobiles and collection--contributed only two percent to the country's per capita disposable income on average.

Salaries took up 70 percent while transfer income such as pensions and subsidies and operational income from trade accounted for the remaining 28 percent.

NBS figures showed that per capita property income of China averaged 240 yuan (about 32 U.S. dollars) last year, up 26.5 percent from the previous year. "Considering the small base, property income has a huge growing potential," he said.

Another random survey by the NBS revealed that Zhejiang people in eastern coast possessed the most financial savvy. In the first three quarters of last year, their property income stood at 697 yuan, the highest of the country.

"As China facilitates financial innovations, the Chinese people will find more investment opportunities including investing aboard through qualified domestic institutional investors," Jiang said.

Editor:Du Xiaodan