In-depth Study of the Government Work Report | How to Increase Income for Urban and Rural Residents? A special interview with multiple economists: researching and exploring central government funding to subsidize companies that proactively raise wages

Financial Daily Reporter | Zhang Huaisui Financial Daily Editor | Wei Guanhong

Following the 2025 government work report’s proposal to “promote residents’ income growth through multiple channels,” this year’s government work report explicitly states, “Develop and implement urban and rural residents’ income-increasing plans.”

On March 5th, the Fourth Session of the 14th National People’s Congress opened at the Great Hall of the People. The 2026 government work report (hereinafter referred to as “the Report”) proposes to develop and implement urban and rural residents’ income-increasing plans, with pragmatic measures to promote income growth for low-income groups, increase residents’ property income, and improve wage and social security systems.

The Report suggests implementing a stable employment expansion and quality enhancement campaign, supporting labor-intensive industries to stabilize jobs, developing new industries and occupations around emerging and future sectors, and strengthening the service sector’s capacity to drive employment. It also emphasizes fully implementing wage payment guarantees for migrant workers, strengthening anti-discrimination efforts in employment, and resolutely safeguarding workers’ legal rights.

Where is the room for residents’ income growth in 2026? How can residents’ property income be increased? Which groups will benefit most? What impact will residents’ income growth have on economic development?

Focusing on these questions, Daily Economic News reporters (hereinafter NBD) interviewed Professor Su Jian, Director of the National Economy Research Center at Peking University’s School of Economics, and Luo Zhiheng, Chief Economist at Yuekai Securities.

Exploring Central Fiscal Support for Wage-Increasing Enterprises

NBD: The government work report this year clearly states the development of urban and rural residents’ income-increasing plans. What signals are released by moving from “multiple channels to promote income growth” to “develop and implement income-increasing plans”?

Su Jian: This year’s government work report turns the concept of residents’ income growth from a principle into actionable steps. For example, it emphasizes increasing income for low-income groups, boosting residents’ property income, and improving wage and social security systems. Compared to last year, the measures to raise urban and rural residents’ incomes are more substantial and targeted. This also means relevant departments will issue policies in document form soon.

Luo Zhiheng: To fundamentally solve consumption issues, the key still lies in income distribution reform. Boosting consumption requires addressing three core problems: first, consumption capacity; second, consumption willingness; and third, the supply-demand fit.

These three correspond to three major sectors and reform directions. Consumption capacity is directly related to income distribution—residents need sufficient income to spend. Consumption willingness is closely linked to public resource allocation, especially fiscal expenditure structure reforms—by increasing government spending on healthcare, education, and pensions to reduce residents’ burdens, people will be more willing to consume. Supply fit involves market access and property rights reforms for enterprises—only by enabling companies to produce high-quality products and services that consumers truly need can supply and demand interact healthily.

NBD: Where is the space for residents’ income growth in 2026? What are the key measures?

Su Jian: To achieve income growth for urban and rural residents, economic development is fundamental. The government’s GDP growth target this year is set at 4.5%–5%, which is a solid range. Economic growth provides the basic guarantee for residents’ income increase.

Second, employment security is crucial. The government work report clearly states measures like implementing a stable employment expansion and quality enhancement campaign. Expanding employment ensures more urban and rural residents have income sources.

Another important measure is increasing residents’ property income, which mainly includes housing, stocks, and bank deposits. Where is the potential for increasing property income? I see two main avenues. First, restrictions on trading rural homesteads and contracted land are strict; if there are compliant channels for monetization—such as for demolitions, relocation housing, or small-property rights houses—farmers can realize significant income. Relaxing trading restrictions within legal bounds can bring tangible benefits to residents.

The second avenue is improving the social security system. While it doesn’t directly increase income, it reduces residents’ burdens. For example, increasing subsidies in healthcare, education, and pensions can lower household expenses. Providing more public elderly care facilities and increasing affordable housing supply are also effective.

Luo Zhiheng: First, I suggest focusing on state-owned enterprises (SOEs), increasing the contribution of state assets’ profits to the treasury, specifically to raise pensions and minimum living allowances in rural areas. This can provide basic elderly security without additional fiscal burden.

Second, for listed companies, encourage higher dividends and stock incentive plans to steadily increase residents’ property income. Wage growth is market-driven; it depends on stable employment and corporate profitability. Wages don’t fall from the sky—growing the economy and the “cake” is necessary to share more. Therefore, the core of wage growth is adopting proactive macro policies to expand aggregate demand.

Third, explore the establishment of a “Urban and Rural Residents’ Income Growth Special Guidance Fund” funded by central government, modeled after fiscal interest subsidies. This fund could provide appropriate subsidies to enterprises proactively raising wages, leveraging fiscal funds to encourage wage increases across society. Once the economy enters a healthy cycle, subsidies can be gradually phased out.

Lower-Income Groups May Benefit More

NBD: Under the national push for urban and rural residents’ income growth, which groups are likely to benefit most?

Su Jian: I believe this mainly depends on the specific policies introduced. From a policy perspective, farmers and migrant workers in cities are more aligned with the initial intent of the policies. Because these groups are the largest, increasing their income can more effectively boost consumption expectations and confidence.

However, I think developing and implementing income-increasing plans for both urban and rural residents is not targeting a specific group but covering the entire population. In this context, public policies mainly serve as a basic safety net, so low- and middle-income groups are likely to benefit more.

NBD: Besides wage increases, redistribution is also crucial for residents’ income. How can the second distribution stage reduce residents’ burdens?

Luo Zhiheng: In redistribution, take personal income tax as an example. If tax reform continues to raise the tax exemption threshold, fewer people will pay personal income tax, weakening its redistributive function, which is not conducive to income equality.

Therefore, I suggest that for households where only one spouse works full-time and the total family income is low, the supporting expenses for elderly parents should be included in special additional deductions. Also, expand deductions for major medical expenses from the taxpayer alone to include parents and children of the taxpayer and spouse, easing household medical costs.

Additionally, improve the quality of public services to increase actual disposable income. For example, expand compulsory education to include free preschool and high school education, gradually extending free education from nine years (elementary to junior high) to fifteen years (kindergarten to high school).

Further, deepen medical security reforms, build a comprehensive medical assistance system, and significantly increase reimbursement rates. Promote nationwide basic pension insurance integration and raise the minimum standard of basic pensions for urban and rural residents. These measures indirectly reduce residents’ burdens through a combination of policies.