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The following OECD assessment and recommendations summarise chapter 5 of the Economic Survey of China published on 2 February 2010.
Income inequality may no longer be on the rise though geographical disparities remain acute
Partly as a result of the various social reforms launched over the past decade, there are encouraging signs that the trend increase in nationwide income inequality may have paused in recent years. A set of new indicators suggests that it may even have receded somewhat in some respects. In particular, income disparities across provinces have tended to decline slightly in recent years, partly as a result of migration, which boosts incomes in the poorer areas via remittances and tends to raise the wages of the remaining workers. That said, geographical inequality remains very high by international standards, despite the Western Development Plan, which aims to boost the development of the sparsely populated and under-developed West. One reason for its limited success in that regard is that the bulk of the expenditure under this policy has long been focussed on large capital-intensive projects designed to bring natural resources to the coastal areas. More emphasis needs to be placed on education, especially in senior secondary schools, which would boost human capital and help reduce income differentials over time, and on the development of private entrepreneurship.
National household income distribution
Probability of household income being within a given CNY 50 interval (1990 urban prices)
Source: OECD estimates using the Chotikapanich et al. (2007) method and source data from NBS.
How to obtain this publication
The complete edition of the Economic Survey of China is available from:
The Policy Brief (pdf format) can be downloaded in English. It contains the OECD assessment and recommendations.
For further information please contact the China Desk at the OECD Economics Department at firstname.lastname@example.org.
The OECD Secretariat's report was prepared by Richard Herd, Samuel Hill and Yu-Wei Hu under the supervision of Vincent Koen. Research assistance was provided by Thomas Chalaux.