On July 22, 2006, the Chinese government announced it would raise salaries or pensions of 120 million people this year.  This includes six million employees of central and local governmental bodies, 30 million employees of public institutions, 50 million people receiving military or civil-service pensions, and 30 million with disability or survivors´ stipends.  The government plans to spend 35 billion yuan (about US$4 billion) this year, though it has not been stated exactly when these raises will come into effect. 

This policy initiative is a step toward implementing President Hu Jintao´s stated goal of adjusting the income distribution in China to reduce inequity and expand the middle class.  Some of the funds will go to special allowances for rural government workers, a group which is usually poorly paid.  Another goal is to improve the ability to hire and retain qualified people in the civil service.  The Ministry of Personnel released statistics showing high resignation levels among younger civil servants, who often leave to enter the private sector. 

Another goal seems to be to level some pay inequities within the civil service, quashing excessively high compensation for some top civil servants, who often receive a number of unofficial benefits in kind such as free apartments.  A governmental committee recently highlighted to the media some employees of profitable state-owned enterprises with salaries as much as 10 times their private-sector counterparts´, saying their incomes should be capped.