In pursuit of bridging the gap between rich and poor, the Beijing municipal government announced Thursday it will require all companies within the city to set up labor unions.

China believes the citywide presence of labor unions will result in higher wages. The municipal government's tax bureau explained the companies that do not establish unions will be charged 2 percent of total labor costs, equivalent to the amount they would be required to contribute to unions.

A Beijing labor union federation told the media the contributions collected from companies will be placed in a reserve fund. A Japanese news Web site, yomiuri.co.jp, said in a related report that if the company sets up a labor union within three years, 60 percent of its charges will be donated to its specific union and the remainder to a labor umbrella organization.

The city government is affirmative the policy will attract investors domestic and international, particularly Japanese companies that eye China as a favorable investment destination.

Chinese statistics have shown that only 60 percent of companies in Beijing have a labor union. Of those, 670 companies are Japanese-affiliated.

The municipal officials are confident companies will abide by the new policy, which already is in force in other Chinese cities, including Nanjing and Dalian.

The move to implement labor unions in Beijing will likely serve as a precedent to other cities, the report said.