Inequality in China: a case study

Abstract

Over the past 30 years, China has substantially reduced the number of people living in absolute poverty. Moreover, during the past 10 years, the country has gradually introduced social protection measures that target the poor and aim to prevent those who have already escaped poverty from dropping below the poverty line in the future. However, over time rising inequalities in multiple forms have increasingly become a threat to social harmony, the prospect of further growth, and the well-being of future generations. As China embarks on another period of reform, it must narrow the gap in income and wealth to pave the way for sustainable economic growth and social development. This can only be done by addressing the root causes of inequality in opportunity and outcomes, such as market distortions, abuse of public resources or power, and unequal access to good-quality public services. The first section of the Report examines the Chinese approach to development over the past 30 years, at the beginning of which absolute poverty was very common. This report argues that both the results and the means of poverty alleviation in China are significant. The second section summarises the emerging issue of various inequalities in China, which include inequality in income, household expenditures, wealth and human capital, also by region and gender. The following two sections examine the impacts of various inequalities on the well-being of children, and the root causes of inequalities respectively. Whilst absolute poverty is still a big issue in China, particularly in remote areas, addressing inequality has gradually become a more important item on the national development agenda. China has made some progress in tackling the immediate causes for rising inequality. In the final section, this report suggests that China should expand the development strategy by addressing the root causes of unequal opportunity as well as unequal outcomes.