China has been experiencing rapid transitions since Deng XiaoPing launched economic reforms in 1978.  In a large picture, one was from a command economy to a market based economy and the other was from an agricultural society to an urban, industrial one.  During 1978-1996, real GDP grew on average by over 9 per cent a year, contributing to a near quadrupling of per capita income.  These reforms have dramatically reduced the number of people below the poverty line from more than 200 million in 1981 to about 70 million in 1995.¹  The rise in income level of both rural and urban employees have considerably improved the livelihood of these residents, and at the same time have brought about a large increase in their bank savings.  The amount of savings of urban and rural residents have increased over 71.4 per cent from 21.06 billion yuan in 1978 to 1,520.35 billion yuan in 1993.

      While the Chinese government with the existing interests in planned economy still shows strong tendencies toward egalitarianism, the results of the reforms have shown wide income disparity.  There are large disparities in wage income between the urban and rural residents, between different regions, and even among the urban residents.  China is also facing other problems such as unemployment that did not exist under the socialist system.  However, the recent changes of fiscal decentralization has weakened the financial base of the central government eroding their ability to redistribute financial resources to the poorer areas and interior provinces.  Furthermore, the prevailing communal values are gradually being replaced by growing individualism which has made it more difficult for the government to maintain its efforts on shared prosperity.

      Notably, however, there were signs of improvements found in recent data.  For instance, during 1995 and the following year, the size of the wage income of the rural residents to the urban residents has increased beginning to show a reversing trend.  There have also been some improvements made on the regional disparities when we used selected social indicators such as the number of educational and medical institutions from the recent years.

      Theoretically, a country cannot avoid having increase in income disparity during its early stages of changing to a market economy.  In a developing country, where many surplus laborers are, it is very difficult to have people get rich quickly and equally in a short time.  Besides, some scholars even argue that having some people get rich first has been used to stimulate enthusiasm and initiative for the rest of the people.  However, most scholars warn that if the current gap exceeds certain limits, with no doubt, people may become severely psychologically distressed and question the sense of fairness leading to a challenge on domestic stability.  Thus, China should find its way to balance their recent policy of "letting few people get rich first" and their classical beliefs in egalitarianism.  Although various views exist, the majority agrees on placing primary importance on promoting equal opportunity in distribution and providing members of society with conditions for equal competition suited to developments in the socialist market economy.

  Contents 
 1. Analyzing the widening income gap in China

(1) General overview on income disparity

a. Urban-rural income disparity
b. Regional income inequality
c. Intra-urban income inequality

(2) Major causes of income disparity 

a. Unlawful factors
b. Uneven distribution of resources

1. Analyzing the widening income gap in China..

(1) General overview on income disparity.
 
 a. Urban-rural income inequality.

      Economic reforms since 1978 have made substantial improvements beginning from the living standards of rural residents.  Many farmers have boosted their incomes by engaging in specialized agricultural activities such as animal husbandry, agriculture, and orchard production, in addition to raising traditional crops.²   Furthermore, township and village enterprises ( TVEs) have accounted for the bulk of increased wage income earned by the rural residents.  As we can see from Figure 2-1, the income distribution among rural residents has had remarkable improvements since the early 1980s.  The share of poverty-stricken population has decreased from over 90 per cent in 1980 to less than 10 per cent in 1996.  Furthermore, we can see a significantly improved balance among different income groups of rural residents since the early 1990s..

 Figure 2-1.  Percentage of Rural Households Grouped by per Capita Annual Income.

      Despite these improvements, however, the rise in income of  rural residents is markedly small when compared to that of urban areas.  Yang and Zhou (1996) explain that the size of rural incomes in China compared to that of urban are small by international standards.  The rural incomes in China are only 40 percent of urban incomes when in most countries rural incomes are 66 percent or more of urban income in 1995.³  As we can see from Figure 2-2, the gap in wage income between the rural and urban residents has grown in incresing rate from 1978 to 1994.  In fact, such disparity has been the biggest contributor to the whole problem of equity in China followed by the inter-regional disparity.  In addition to the huge gap in income, the Chinese government has maintained its policies to improve the urban standards of living.  Urban citizens have been subsidized by receiving low-cost capital for urban enterprises, low-cost housing for urban residents and generous pensions and health insurance schemes.⁴  Although some rural residents who work for county or township governments have employer-covered health insurance, the quality and availability of medical personnel, clinics, and hospitals in urban areas far exceed that in rural areas.

      Such disparities in income between rural and urban residents have created some serious economic and social changes  in rural areas.  First and the foremost important issue is the emigration of rural population into urban areas.  Together with the declining growth rate of China's rural population, the share of the PRC population living in the countryside has fallen from 81 per cent in the early 1980s to 71 per cent in 1996.  Secondly, China has been losing about 0.5 per cent of its farm land to conversion annually.  Villages and farmers are motivated to sell or lease their land for industrial or commercial use because they are well compensated for such transaction.  Lastly, significant population has quit farming in favor of wage imployment or non-agricultural activities such as running small shops.  These problems altogether have created serious concerns on producing enough grain for the purpose of self-sufficiency in China.          

  Figure 2-2.    Wage Income of Rural Residents vs. Urban Residents.

 

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 b.Regional income inequality.

      Decades of strict central planning has created serious disparities in income in different regions of China.  According to the China Annual Statiscal Book, as shown in the following Table 2-3, per capita annual income of Shanghai was 7555.89 yuan far ahead of other regions.  When we compare the average annual income of high income region such as Jiangsu province, which is located in the eastern region, with that of Guizhou, which has the lowest income level among the western region, the difference is quite enormous.  In 1996, per capita annual income of Jiangsu was 2613.54 yuan while Guizhou had 609.80 yuan, the ratio between two being 4.3 : 1.  Similar results could be found when we use different criteria.  For instance, in 1996, per capita GDP and the total GDP of the eastern region were 1.9 times and 5.5 times larger repectively than those of the western region.
 

 c. Intra-urban income inequality.
      In addition to the gap between urban and rural areas, city dwellers also feel the income inequality among themselves. According to the Urban Socio-Economic Survey Organization of the State Statistics Bureau, the per capita income of the top 20 per cent income earners in 1994 was 4.2 times greater than the bottom 20 per cent, worsened from 2.9 times in 1990.⁵
Some professionals argue that the problem is partly due to the psychological factors of urban workforce.  Although many enterprises in urban areas are either stopped working or closed down, many of the idle employees who have been laid off are waiting for future employment that would provide the same or better working environment. These urban dwellers are avoiding so called, 3Ds; dirty, difficult, and dangerous. Furthermore, they have been accustomed to the decades-long practice of equal income allocation, which is also the cause of de-motivation among them.  Currently, a good number of these idle workers are either receving low incomes or no incomes at all.  The wage level of retired employees is also quite low, and considering the effects of inflation their living standard is falling.

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 (2) Major causes of income disparity.

The signs of serious income disparity began to occur soon after the Chinese government has granted regions and individuals with the conditions for them to get rich first through special, preferential policies.  Such course of polarization in China may be an unavoidable situation since the country has been on the developmental stages of economy.  In this paper, however, we will not be discussing about the general causes of income disparity which have been previously studied in numerous materials..

 a. Unlawful factors.

In this paper, "unlawful factors" include; exploitation of policy, systematic, and administrative loopholes, and abusing individual's power to gain personal wealth through illegal profiting, and tax evasion.
 

• Significant decrease in the state finances has caused many problems of corruption in government institutions and organizations in recent years.  There have been reports on the abuse of power for  personal gain and exchanging power for money.

• There has been ongoing illegal activities which involve a large scale diversion of state assets into private hands.  One estimate puts it at a rate of 100 million yuan a day or 36.5 billion a year.  A significant portion of this amount is used in personal investment which is often unproductive and mismanaged creating a loss.  This is not only adding problems to a lumbering public sector but also widening the income disparity by benefitting only a small minority.

• A portion of the corporate income is being disguised as personal savings to avoid official supervision and to capture higher interest.  Chinese banks have paid a higher interests on personal bank deposits and bonds which is thought to have also contributed to a such phenomena.⁷  The growth in savings has far outstripped GDP growth between 1991 and 1994.  According to one estimate, the financial and equity assets of Chinese citizens have increased 70 and 100 times respectively during this period.  For instance, in 1994, the total increase in urban wages was 170 billion yuan- only a third of the growth in urban personal financial assets.  However, the total financial assets of Chinese citizens increased to 580 billion yuan that year which is 470 billion more than their net income.  Even if we ignore the living expenses this amount defies the common explanation in terms of wage income growth.

• According to the government statistics in 1996, roughly about 50% of all individual income tax is drained off yearly. Plus, over 90% of self-employed business people and 80% of private enterprise owners have a record of tax dodging.⁶   These are caused primarily by citizens' vague concept of their responsibility to pay taxes, and regulators' weak enforcement of existing tax laws.

 b. Uneven distribution of resources between different regions.   

      China's development policies have long created an unbalanced regional development by variations in resource allocation.   Thus, in 1949, 71.5 per cent of Chinese industry was concentrated in the coastal areas, and only 28.5 per cent in inland regions.⁸   When the Chinese leadership in the early 1950's started its strenous efforts at industrialization, it regarded the huge coast-interior imbalance as irrational.   During the Maoist period, therefore, the government carried out an interior-oriented regional development policy.⁹   Furthermore, Maoist leadership pursued a nationwide self-reliance policy encouraging each region and locality to act as an autonomous production unit.  Such changes were implemented in order to substitute the role of market or larger planning apparatus.  Thus, the principles of regional specialization and exchange and the advangtages of specialization in production on a comparative advantage based on cost was ignored until the reforms began in China.

      Although China's post-Mao regional development strategy has gradually increased mobility of resources, inappropriate measures or poor management on the part of local authorities and enterprises during the reforms resulted in losses of large quantities of state or collectively owned assets and resources.  The bulk of resources also went directly or indirectly into the hands of private individuals and for the most part embezzled by a minority of people.  Table 2-4 shows the gaps between three regions by using the social and economic indicators.  Notably, the size of the economies differ greatly from the number of employed persons to the amount of outstanding savings deposits.  For instance, the amount of utilized FDI in eastern provinces outnumber the western provinces by over 25 times.    From the given data, we can identify the following characteristics about the regional resource distribution:

• Human resources are concentrated in coastal areas but mineral resources are deposited mainly in the interior area.  As we can see from Table (2-4), the number of industrial labor force worked and lived in the eastern area (approx. 250million) was almost 49 per cent of the total number in 1996. On the other hand, most of China's minerals, forests and other natural resources are located in northwestern and central China.  Only one fourteenth of the nation's coal reserves are located in the coastal regions while more than 92 per cent of its coal deposits are in the interior.  About 90 per cent of the nation's forests are in the central and western areas while less than 10 percent are in its coastal regions.

• The coastal regions possess a well-developed financial base and manage a relatively high level of capital accumulation.  Over 61 per cent of the total investment in fixed assets was made in the eastern region in 1996.

• Productivity and living standards in the coastal are higher than that of the interior regions.

• Disparities in the technological capabilities between the coast and the interior are significant.  The eastern region possesses over 49 percent of the total number of R&D institutions in 1996.

Therefore, an uneven distribution of resources between the different regions is a basic feature of China.  The coastal area has a relatively well-developed economy and technological base with better access to capital but is handicapped by over-population which could lead to future problems.  By contrast, the interior area is characterized by a vast land area, rich mineral resources, sparse population, and weak technological capabilities.¹⁰  Because of their different resource bases these areas could complement each other.

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2. Arguments:

      As we examined, there are clear gaps in wage income between rural and urban areas, and more or less similar results are shown between different regions of China.  However, we should remember that there are limits to the study since we focused on wage income as the criteria of the analysis.  Income often fluctuates from time to time particularly for farmers and self-employed people.  Furthermore, income analysis would not fully capture the welfare gap between urban and rural residents in China since urban workers typically enjoy in-kind benefits through their employers.  Such benefits would include subsidized housing and social insurance programs.  Although this trend has been changing through ongoing reforms of the country's enterprised-based social security system which reduced subsidies to urban workers, the rural population continues to be largely on its own in providing for retirement.  We should also consider the fact that a large portion of the "side-income" is still not accurately reflected in official data that we relied upon for our study.  There are limits on getting the accurate figure since they are often generated from diversion of state assets or other forms of illegal profitting such as for the purpose of tax evasion.

      We also saw clear disparities in social and industrial  infrastructure between regions.   It is undeniable that there should be adjustments made to reduce the gap between regions by investing in infrastructure in less developed areas.  However, we should remember that the numbers we see may lead us to wrong ideas since the economies of these regions vary in size.  For instance, the total population and the number of labor force with occupation vary greatly by regions.  Thus, the total number of health or educational institutions in one region may not represent the objective condition of living since it does not explain the general availability for an individual.  To validate this argument, the following table uses groups of data that were modified by having each data divided by the number of total population.  Notably, although the amount of per capita GDP still shows large gaps, more categories shows rather modest gaps between the regions.   The average number of health institutions per person shows similar results in three regions, so is the number of higher education institute.  One might argue that using number of health institution may not be proper since the institutions may vary in size.  However, even when we compared the number of doctors per person in the eastern, central, and the western regions, the result was almost identical.  Although we could find somewhat even level of social indicators, central and western regions still have severe disadvantages in the basic infrastructure and financial base that could be crucial for further industrial development.
 

      Getting back to the previous analysis on the wage income of the rural residents by using Figure 2-1, we see a remarkable overall increase in income among the population from the early 1980s to 1996.   However, we can only see a growing  income disparity when we look at Gini-coefficient of the same period  as in Table 2-3.  It is because almost everyone was below the income level of 500 yuan by 1981 (see data from 1980 to 1985 in Figure 2-1), and therefore, the index would show lower figure indicating modest income disparity.  However, as the range of income increased so was the gap between the rich and the poor.
 
Table 2-3.  Comparison of Gini index. 

	1981	1982	1983	1984	1985	1986	1987	1988	1989	1990	1991	1992	1993	1994	1995
Rural	0.239	0.232	0.246	0.258	0.264	0.288	0.292	0.301	0.300	0.310	0.307	0.314	0.320	0.330	0.340

 Source:   Zhao Renwei & Li Shi (1997), "Increasing Income Inequality and Its Cause in China," Journal of Economic Research, No.9.
 
      Then how serious is the inequality in China compared to other countries?  Is Gini-coefficient of China high when compared to other developing and developed countries?  The following table shows that Gini-coefficient of China is not so high compared to figures of selected economies.  In fact, it is lower than US and some developing countries including the Southeast Asian NICs.
 
 Table 2-1.  Comparison of Gini index beween selected economies.

	China	US	Korea	Thailand	Indonesia	Mexico	Chile
Survey Year	1995	1994	1994	1992	1993	1992	1994
Gini-coefficient	0.445	0.462	0.285	0.462	0.320	0.503	0.565

Source:  Zhao Renwei & Li Shi (1997), "Increasing Income Inequality and Its Cause in China," Journal of Economic Research, No.9.
               US Census Bureau.
               World Bank, Selected World Development Indicators 1997.

Thus, perhaps the issue of income disparity in China is not as serious as we perceive, and the current income gap is reasonable when a country adopts capitalism.  In fact, there have been some reports indicating that the problems are not as serious even when compared to neighboring economies.  For instance, according to the Standard Chartered Bank,  income disparity in China is better than the level of Hong Kong and Singapore in the early 1980's.  The bank argues that the income distribution in China as a whole is less uneven than many other countries, both developed and developing, emphasizing the psychological and social factors for responsible cause of such perception.¹²  World Bank in a recent publication also pointed out that even in East Asia including the four "tiger" inequality is becoming more widespread despite their success in pulling millions of people out of poverty line.  The report emphasizes the growing gap in earning power between skilled and unskilled workers in increasingly sophiscated economies.  Such condition of poverty is affecting rural and agricultural communities where people typically have little education and few prospects for alternative employment.¹³
 
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3. Current efforts of the Chinese government.
 
      The sense of equality has gained its importance during the recent years because of the vary fact that China is going through a transition where decades of  socio-economic system and ideology are being reevaluated and replaced by market-driven capitalism.  The Chinese leadership acknowledges the fact that in such circumstances maintaining the stability is the most crucial factor to a success of the reforms as shown in the case of the Former Soviet Union.   In fact, Zhu Rong Ji stated that "it is impossible for the government not to regulate the market and not to intervene in prices," warning that "without such intervention China will have serious consequences of uneven distribution of wealth".¹⁴  Therefore, "liberalizing the economy while maintaining a tight control on the reforms process" has been the main theme of government stance on thier reform.

      Recently, traditional grant or relief money and goods have been distributed through administrative organs in an egalitarian manner to poor area.  When doing this, instead of merely providing aid to those areas, the central government has been encouraging people to form "economic entities, service organizations and enterprises" so that they can pull themselves out of poverty and gradually replace it with a stable income.   The central government has also been providing so called, " Development Fund for Aiding Underdeveloped Areas," to help the poor start their own businesses.   Furthermore, the government is continuing to allow differing revenue contributions of each provinces to the central budget.  However, the Chinese government is experiencing difficulties in effectively implementing their policies due to the significant decrease in state finances.  The recent changes of fiscal decentralization has weakened the financial base of the central government eroding their ability to redistribute financial resources to the poorer interior provinces. . Shortages of state finances have limited further deepening of the reform of the wage system for government functionaries and government institutions, making it impossible to implement the policies of "fostering honesty by means of high salaries" and "retaining talent by means of high salaries"¹⁵
 
      The following is a summary of a report delivered by the minister of State Planning Commision, Chen Jinhua, at the first session of the Ninth National Peoples' Congress on March 6, 1998 which would give us a brief look at the current efforts of the Chinese government:

• A system of guaranteeing residents' minimum living standards has been established in some 330 cities.

• A unified basic old-age social insurance system for enterprise employees has started.  The Chinese government has intoduced a pension program for rural residents aged 20-60, by adopting Chilean model of social security, who can make personal contributions to individual retirement accounts.  Similar efforts are made on township and village level to match a portion although these have been so far limited to welthy rural areas.

• Experimental reform of the medical insurance system was expanded.

• Development was made in elementary education by popularizing nine-year compulsory education contributing to the elimination of the illeteracy (Recent data indicates that the average length of education in various provinces range between 5 to 7 years)..

• Programs under "project 211" went into construction building institutions of higher learning and research centers throughout the nation.  Vocational and adult education continued to develop.

4. Suggestion.
 
      a.  China should create unique and proper welfare and income redistribution  system (neo-egalitarian system).
      The authorities should introduce a wide range of policies that are aimed at reducing unemployment and improving the labor forces' competitiveness.  Furthermore, government should reduce differences in education, health services, housing and access to employment and credit between urban and rural areas as well as in different regions. The government should create a system for welfare and redistribution of income that is suitable for the current condition of the Chinese economy.  In doing this government should:

• minimize the degree of urban subsidy and expand the scope of receipients to rural population.
• promote better access for the unemployed to the labor market and jobs.
• provide training and education for the labor force.
• adopt preferential treatment for foreign investment in inland areas.
• remove discrimination against women in education and employment.
• create jobs by investing in service and technology oriented industries as they continue to reform SOEs.

• Currently World Bank is putting efforts on reducing poverty in China by focusing on rural developmental programs.   These projects include promotion of health and education for the poor at the village level, job training, rural infrastructure such as drinking water and village roads, and so forth.  The Chinese government not only should allow these multilateral assistance but also actively participate  in solving these problems.

• China is also experiencing severe condition of polution as the country continues to promote industrialization.  Although this does not directly apply to the issue of income redistribution, it will improve the overall living standards of people in China.  Manufacturing industry is rapidly increasing its output when coal is still the major resource of energy.  Nevertheless, the automobile boom is taking place in China contributing to the existing problem.  These have caused serious lead exposure and indoor air pollution which are especially harmful for children.  Further  increase in CO2 emissions is predicted to cause serious problems such as acid rain which could be led to a  loss of crop.  Thus, China should promote close cooperations with organizations such as EPA and USDOE through the exchange of concerns and receiving necessary technology and support.¹⁶

• Laws on business ethics, personal income tax, and labor laws should be strictly enforced.
• The conversion of public funds into personal consumption fund should be strictly forbidden.
• Levying personal income adjustment taxes and by reinforcing social security measures.

• guarantee the compensation based on the contribution.
• rely on equal competition and equivalent exchange.

  Comments
 

Related Web Sites of Interest 

          United Nations Development Program (UNDP)
          U.S. Agency for International Development (USAID)
          World Bank

Reference

1. China Economic Review. Income Inequality Widening. [Online]. (Lexis/Nexis), Nov. 1997.   Back to the Text

2. US-China Business Council.  Shifting Boundaries; China's Rural Population, The China Business Review, [Online]. (Lexis/Nexis), Information Access Company, Sept. 19, 1997.   Back to the Text

3. World Bank.  China 2020: Sharing Rising Incomes: Disparities in China.  The IBRD, 1997 (p.16).   Back to the Text

5. Jane Macartney. China: China Economic Chief Praises Keynes, Price Control. Reuter Textline [Online]. (Lexis/Nexis), May 17, 1995.
Back to the Text

6. Lu Jingxian. China: State Works to Narrow Income Disparities. Reuter Textline, China Daily, [Online]. December 10, 1996
Back to the Text

7. Business Times (Singapore).  A Chinese High Savings Puzzle. Times Business Publications, [Online].  (Lexis/Nexis), May 30, 1996.
Back to the Text

8. Jung Dong Park.  China in 21st Century, Korea Economic Daily Publishing Co, July 1997. (pp.87-88)   Back to the Text

9.  Liqun Jia and Clem Tisdell. Resource Redistribution and Regional Income Inequality in China. Asian Economies, The Institute of Asian Economies, June 1996.     Back to the Text

10. Ibid.    Back to the Text

11.  Hak Choi. Inequality of Income Growth in China. Asian Economies, The Institute of Asian Economies, Dec. 1996. Back to the Text

12. South China Morning Post.  Mainland Income Gap 'Exaggerated'.  South China Morning Post Ltd, [Online]. (Lexis/Nexis), January 22, 1998.    Back to the Text
 
13.World Bank.  Poverty and Inequality-The Other Face of the Asia Miracle.  The IBRD, [Online], Aug. 26, 1997,
Available:http://www.rocks.worldbank.org/html/extdr/extme/1450.htm. Back to the Text

14.  Jane Macartney, May 17, 1995.   Back to the Text

15.  Shen Shuisheng and Yao Yuqun. On the Problems of Distribution of Social Income in China. Chinese Economic Studies, vol.29, no.6, Nov.-Dec.1996, (pp.6-17). Back to the Text

16.  Excerpts from a lecture by Richard Newfarmer.  Environment and Economic Growth in China, (offered at the George Washington University), Feb. 9, 1998.
Back to the Text
 
 

Further Readings

1. Zheng Zhixiao. On the Debate Regarding the Distribution of Personal Income. Chinese Economic Studies, vol.29, no.3, May-June 1996.
 

2. Part 3 Asia-Pacific; National People's Congress; Planning Minister's Report. Chinese Planning Minister Delivers Economic, Social Report,
    'Ta Kung Pao', Hong Kong, [Online]. BBC Summary of World Broadcasts (Lexus/Nexus), March 10, 1998.

3.  Jung Dong Park. China in 21^st Century. Korea Economy Daily Publishing Co, July 1997.

4. Press Release.  Poverty and Inequality- The Other Face of the Asia Miracle.  World Bank, Aug.26, 1997.
    Available: http://http://rocks.worldbank.org/html/extdr/extme/1450.htm..htm

5. Press Release.  Everyone's Miracle? Revisiting Poverty and Inequality in East Asia.  World Bank, Aug.26, 1997.
    Available: http://http://rocks.worldbank.org/html/extdr/extme/1448.htm.

6. Asia Pulse. National Income Distribution to be Adjusted in China. [Online]. (Lexus/Nexus), July 15, 1997.

7. South China Post. Dismal Data on State Firms Hides Rosier Prospects. [Online]. (Lexus/Nexus), April 26, 1997.

8. AAP Newsfeed. China to Adjust National Income Distribution Pattern. [Online]. (Lexus/Nexus), December 26, 1997.
 
9. Press Release.  China's Challenges: Ensuring Growth with Equity.  World Bank. Sept. 22, 1997. [Online]
    Available: http://rocks.worldbank.org/html/extdr/extme/ampr.008.htm.
 

Notes

i. Thus, if anyone wanted to leave their area to even visit someone in other cities or provinces the person had to request for a permit prior to travel.  In the late 1950's during the period of "Great Leap Forward", when the Chinese government temporarily loosened its control over the society, a large number of rural population moved to the major cities. As a result, the government forcefully sent them back to their villages reducing the number of employees at SOEs from 53 million in 1960 to 33 million in 1963.   Back to the text

ii. Gini-coefficient of zero ( 0 ) refers to a perfectly equal distribution of income.  For complete inequality, in which only one person has any income (if that were possible) the Gini-coefficient would be one.  To compute the Gini-coefficient, we first measure the area between the Lorenz Curve and the 45 degree equality line.  A Lorenz curve is a diagram showing the cumulative percentage of national income received by a certain percentage of individuals or households.    Back to the text
 
 

Per Capita Annual Income of Urban and Rural Household 

	1985	1986	1987	1988	1989	1990	1991	1992	1993	1994	1995	1996
Rural	397.6	432.8	462.6	544.9	601.5	686.3	708.6	784.0	921.6	1221.0	1557.7	1926.1
Urban	685.3	827.9	916.0	1119.4	1260.7	1387.3	1544.3	1826.1	2336.5	3179.2	3892.9	4377.2

   Source: China Annual Statistics Book, 1997.
  Back to the text
 
 
 

A Comparison on per capita annual income of urban vs. rural residents (1996)

Back to Text.
 
 
 
 
 

 
Per Capita Annual Income of Urban and Rural Household

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