Ready For Red Deeds? Communism's Back In China As They Close Gap Twixt Rich And Poor


 Karl Marx would be pleased. After decades of "from each according to their ability," China's rulers are promising a bit of "to each according to their need."

A plan endorsed by China's State Council on Tuesday is meant to head off social unrest by closing the gap between rich and poor. It also should help get China's economy on an even keel with more equal income distribution fostering higher levels of consumption.

Targets include a five-percentage-point rise in dividends from state-owned enterprises and a minimum wage increase to about 40% of average earnings,form 30% a year ago. Higher interest rates for savers is another proposal, as is a clampdown on the hidden incomes of China elite.

This could move one or two percentage points of gross domestic product into household pockets by 2015. If the government opts for action on land reform and urban residence rights for migrant workers, the impact could be bigger.Not everyone will be pleased. Liberalizing interest rates will erode bank profits. Higher wages will hit exporters struggling with razor-thin margins. Luxury firms may suffer from a corruption crackdown.

The winners are firms that sell to China's emerging middle class like consumer-goods firm Unilever Internet company Tencent. Progress won't be easy, with powerful interests likely against the changes. But China's new leaders are signaling that they mean business on re balancing. (Tom Orlik for WSJ)