Income Distribution in the Chinese Economy: Recent Trends and Challenges

Abstract

This paper examines the recent trends in regional income disparity and urban-rural income inequality in the Chinese economy. It finds that the income disparity between the eastern and western region had declined, but the urban-rural income inequality continued to rise in all four regions during the period under consideration. Moreover, the urban-rural income disparity increased more rapidly in the eastern region than in the western region, which was attributable to a slowdown of rural income growth in the eastern region. From a policy perspective, it is important to develop a dynamic agricultural sector to enable faster growth of rural household income.