Analysis of strategic faults in distribution adjustment of Chinese state-own corporation reforming under influence of world wide economic crisis

With continuous increase of the Gini coefficient to polarization, Beijing is facing critical challenges in both political and economical aspects. Although Chinese government has always expressed wishes to achieve ldquoprosperity in commonrdquo, things have gone contrary to current statistical severe wealth polarization, which is the result of improper system transition path. Deepening the reform of income distribution system for rapid improvement of livelihood should be a key mission so that to increase income of urban and rural residents. Here, we analyzed the strong path-dependence of Chinese economic reform for state-own corporations, especially the distribution system. Further, we discussed many profound paradoxes in principle agency, property right boundary, distribution that exist in the public ownership economy. Based on these analyzes, we dissected the fundamental reasons of the climbing Gini coefficient in China and limitations in the solution proposed by the 17th CPC congress final report for solutions to balance income disparity based on principle-agent theory. We demonstrated that Chinese state owned corporations should not take it for granted that as long as the reform direction is right, reform objectives will be achieved by releasing contradictions. Instead, we propose that the essence of reform not only include short term effect, more importantly, should consider benefits in the long term. Otherwise, improper choice in original reform will tamper the long run goals. Finally, we proposed suggestions on solving current social, economical and political problems in China.