China's income distribution gap

China is a country where the cities remain separate from villages and development is uneven amongst regions. Since 1990s, the income distribution gap has begun to widen. At present, the gap is measured in four areas: within urban areas, within rural areas, between urban and rural areas and amongst regions.

Gap within urban areas: 2005 Social Blue Book released by Chinese Academy of Social Sciences shows that the gap of disposable personal income (DPI) between the city's richest 10 percent of residents and poorest ones will increase by 8 times. The DPI of some 60 percent of urban residents is lower than national average.

Gap within rural areas: The gap among farmers is also enlarging. By the year 2003, the ratio between the highest group and the lowest group was 7.3:1 (altogether five groups) and the Gini Index reached 0.37 in that year.

Gap among regions: The gap within urban and rural areas is closely related with that of regions. The seriously uneven development between east and west regions has caused the income gap to rapidly expand on certain levels.

Gap between urban and rural areas: Since China carried out the opening up and reform policy, the income gap between urban and rural areas has experienced the following: from a rapid narrowing to gradual enlargement, to gradual narrowing, then to speedy enlargement. The officially statistics showed that by the end of the first three quarters, the ratio between urban and rural residents reached 3.35:1.

Besides this, the gap among various industries also attracted great attention.

It is reported that the Gini Index of China calculated on the basis of purchasing power is much lower than that of the basis of nominal income, meaning that the gap is actually overestimated.

Yi Gang, assistant of president of People's Bank of China, said on a form that the Gini Index is calculated on the basis of nominal income but does not take account of price differences among regions and could not only not indicate the actual income gap but also the side effects of the process of reform.

On the form, Director of Institute on National Economics Fan Gang pointed out that the reality and system of developing country would influence income distributions for a long time in China, and possibly many decades of years to come.

By People's Daily Online



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