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Income gap expanding as urban residents make the most of economy

(Global Times)

15:07, September 21, 2011

The income gap ratio between urban and rural China has reached 3.23:1, becoming the largest in the world, a report published by the Chinese Academy of Social Sciences (CASS) in August explained.

The report said the urbanization rate of the country is now at 49.68 percent, indicating China is entering a so-called towns era with nearly half of the population living in urban areas.

Wei Houkai, chief editor of the report, said the income gap between urban and rural areas has been expanding during the past decade.

Zhang Yuanhong, a researcher and professor at the Rural and Development Institute of CASS, said the gap has increased too fast.

"We don't expect the ratio to continue its growth, as it threatens social stability," he said.

Unlike developed countries, whose wealth differences are caused mainly by industry and regions, the urban-rural income gap plays a vital role in China's division between rich and poor, according to Zhang.

According to Zhang, the ratio of the urban-rural income gap generally dropped until the early 1980s. In the mid-1980s, the gap began to grow.

The reform and opening-up policy was first implemented in rural areas, and their income grew fast. So the income gap shrank at the time. But the situation changed after urban areas began developing around 1983 and 1984, said Zhang.

According to Zhang, there was a period in which food prices went down and hurt farmer income. The government is making efforts to improve the situation, such as remitting the agricultural tax and supplying farming facilities.

Song Yingchang, the subeditor of the CASS report and also the director's assistant of the Institute for Urban and Environmental Studies, said that the income of migrant workers has also encountered inequality in cities and towns.

"The salary gap ratio between urban and migrant workers was 1.73 in 2005, but rose to 1.9 in 2009, and it's still expanding," said Song.

"China has already arrived at the turning point of the urban-rural income gap, which is decided by indexes including GDP per capita, industrialization and urbanization degrees," said Zhang. "And it is time to shrink the gap," he added.

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