Income gap not as big as earlier thought

08:22, February 05, 2010      

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By Song Shengxia

The income gap between the rich and poor in China has been narrowing in recent years and may have been overstated in the past, according to a report released Tuesday by the Organization for Economic Cooperation and Development (OECD).

While the report suggests that China's efforts to tackle one of its toughest social problems are being increasingly recognized worldwide, some experts are challenging the report results while pointing to the core issues that they say the government needs to address to further narrow the national wealth gap.

The report said that increased welfare spending in rural areas and growing migration to cities has helped mitigate the increase in inequality across the country.

Richard Herd, a senior economist at the OECD, said at a press briefing Tuesday in Beijing that the migration of rural people to urban areas for work allows them to increase their income dramatically.

Income inequality is measured by the Gini index, which ranges from zero to 100, with zero indicating complete equality and 100 showing complete inequality, while 40 is seen as a warning threshold.

According to academics at the Chinese Academy of Social Sciences (CASS), the Gini index stood at 49.6 in 2005. However, the OECD put the index at 41 in 2005 and 40.8 in 2007, based on what it called a better gauge of price changes and unregistered rural migrant workers in cities.

Wu Yaowu, an associate professor with the university's Institute of Population and Labor Economics, told the Global Times that it's possible that the increase in China's inequality has leveled off in recent years.

"The wealth gap in China has been overstated by international organizations and even government researchers in the past because they failed to include the rural population that migrated to cit-ies, because it's difficult to track down their income," he said.

Since 2004, there has been a significant shortage of laborers in cities – a trend that helped raise the average monthly income of migrant workers from between 300 yuan ($43) and 600 yuan in 2002 to between 1,200 and 1,500 yuan now.

He said that as rural migrants in cities earn more than those staying in their hometowns, their income level can be used to level off the figure if it's included in the estimate.

"There's no doubt that China has made incredible progress in recent years to lift people out of poverty," Wu said. "There will be no group in the social stratum deprived of opportunities to share in the fruit of China's development."

Source:Global Times
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