I have three plausible explanations，and most likely it is a combination of all three，although in economic logicthings do not add up.The first reason is that Beijing did not know that the incomes of poor peasants and low-level workers have been sharply rising since 2000，atrates which in my vieware unmatched in history.However，workers earning less than RMB 1,600 permonth do not have to report tax，and floating workers simply do not report，so their incomes are difficult toassess.More important is the fact that registered popula-tion in the villages remains large，although many people have floated away.If one divides the observed totalincome of peasant households with the registered popu-lation，an artificially lowper-capita income is obtained.
In January 2004，two Chinese authors published abook which won international acclaim.This bookreports that Chinese peasants are having a difficult time.49 A year later，the World Bank reported that the live lihood of Chinese peasants has deteriorated since thecoun try joined the World Trade Organization.Suchstatements，coming at a time when peasant wealth and welfare was improving at the fastest rate in Chinese his-tory，are irresponsible.Indeed，as recently as 3 March2008，Justin Lin reported in the aforementioned Beijing meeting that the income distribution in China is becom-ing more and more unequal and unfair.This was the main issue of his report.
【49】陈桂棣与春桃，《中国农民调查》，二○○四年一月人民文学出版社。
50Justin is the man in charge of agricultural policy，so how could he not be aware that Chinese peasants have never had better days than now？How could he not know that in terms of percent agegrowth the income gap has been closing fast the past several years？
The new labor lawis intended to help the poor，but on17 January 2008 I published an article predicting this law would create a downward kink in the rising incomecurve for China’s poor.51 This kink is beginning to beobvious now!
A second plausible reason why the new law was intro-duced is that President Hu has expressed the principle ofa scientific approach to development.52 No one canobject to that，but unfortunately this principle has been inter preted by many to imply an intention to phase outlow-tech labor-intensive activities.It should not be for-gotten that the economic reformis meant to lift the mass-es out of poverty，and that for a country with a large pop-ulation like China，embodied capital-augmenting techno-logical progress requires labor of both high and lowpro-ductivities competing and supporting frombelow.
Finally，there is the bad influence of western econom-ics.
【50】《林毅夫称收入分配不合理越来越明显》，二○○八年三月七日《新京报》。
【51】张五常，《灾难的先兆——三论新劳动法》，二○○八年一月十七日发表于《壹周刊》。
【52】胡锦涛提出“科学发展观”。
