The People's Bank of China (PBOC), the central bank, said last month that urban workers earned an average of 18,400 yuan (US$2,300) last year  an annualized increase of 14.8 per cent.

But it found that the income rise was mainly limited to SOEs and foreign-funded companies, at nearly 20 per cent. 

In the manufacturing sector, wage increases lagged GDP growth by 5 percentage points every year between 1998 and 2003; and some factories have not given a pay rise for up to five years.

Considering income from corruption and monopolistic businesses, Wu Zhongmin, a researcher with Central Party School of the Communist Party of China, has concluded that the Gini coefficient in China has risen above 0.5.

The official level of the coefficient  an international measurement of income disparity  was 0.45 last year, compared with 0.389 in 1995 and 0.417 in 2000.

A zero coefficient represents perfect equality and 1 indicates a complete monopoly of wealth by the privileged; and 0.4 is considered a danger level.

The disparity and its potential social implications have attracted the attention of China's highest leadership. Speaking during a recent discussion on income distribution,  President Hu Jintao said salaries should be market-oriented but the nation must focus on fairness, make favourable policies for poorer regions and crack down on illegal earnings.

In addition to capping income in monopoly sectors, Wu Jinglian, economist with the Development Research Centre of the State Council, has also called for establishing a comprehensive social security system, which he said is "well within the country's financial capacity."

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