• Related Links
• How Rising Wages Are Changing The Game In China
  A March '06 Business Week article outlining how a skilled labor shortage might lead to higher wages and slow China's economic growth.
• The Dark Side of China's Rise
  Minxin Pei, director of the China Program at the Carnegie Endowment for International Peace, writes that the only thing surpassing China's high speed growth is the hype about it. He looks at the decay within China due to the flaws of its political system and the corruption this has spawned. (March/April 2006)

Although China's free-wheeling economy has lifted an estimated 250 million people out of poverty over the last 25 years, the income gap in this Communist Party-ruled nation has widened between its urban and rural areas -- what Nicholas Bequelin calls, respectively, "China A and China B."

Cities have become boom towns where wealthy inhabitants spend their disposable income in a growing consumer market. But rural Chinese have faced land seizures, increased unemployment and severe cutbacks in free or nearly free health care and education.

China recently announced the abolishment of the agricultural tax and educational fees, but critics maintain the reforms are a drop in the bucket for the 750 million rural residents who must contend with local governments that can be inefficient or corrupt.

In March 2006, the Chinese government announced that it would inject a further $5 billion into the rural economy over the next twelve months. That amounts to $7 a head -- probably not enough to change the minds of the hundreds of thousands of peasants who are leaving their rural homes and families to find work in industrial areas.

Here is a comparison of the latest available figures for urban/rural populations. For more on income disparity among nations, see the Editor's Note below this table.

Category	Urban	Rural
Population (2005, millions)	562	745
Per capita GDP (2003, yuan)	16,307	5,047
Per capita income (2005, yuan)	10,493 (disposable)	3,255 (net)
Per capita consumption expenditure (2003, yuan)	6,511	1,943
Consumer prices (percent increase from 2004 to 2005)	1.6	2.2
Average wage/year (2005, yuan)	8,020	2,405
Unemployment (percentage)	8 to 12	20
Poverty (percentage)	6 to 8	2.8
Life expectancy (2000)	75.21	69.55
Percentage with medical insurance (2004)	50	15
Avg. years of schooling among laborers (2002)	10.2	7.3
Avg primary school education funding (2001, yuan)	1,484	798

Numbers compiled from China's National Bureau of Statistics, the United Nations' China Human Development Report 2005, and news reports.

 

Editor's Note: The United Nations and the World Bank measure income disparity with the Gini coefficient, a measurement that starts at zero when all of a nation's citizens have equal income and ranges up to a theoretical 1.0, when all income is concentrated with a single individual. A Gini coefficient over 0.4 is considered worrisome. China's measurement was 0.45 in 2002, up from 0.30 in 1982. By comparison, the most recent U.S. Gini index was 0.466 [in 2004]; in 1982 it was 0.412. India's was 0.32, and Sweden's was 0.25 in 2002.