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Contents Introduction

This paper examines recent trends in the distribution of income and consumption in China. National accounts data and household survey data from the National Bureau of Statistics both indicate a tendency for the incomes to rise faster in the East of the country than in the Center and the West, with particularly large changes in the 1990s. Similar though less pronounced trends are also observed in national accounts’ estimates of household consumption. On the other hand, survey estimates indicate a relatively low level of regional inequality for both incomes and consumption, and no trend toward increased regional inequality for consumption. Official surveys also show that urban-rural gaps increased markedly in the early 1990s and then again after 1998, both nationwide and in most regions. They also indicate that incomes grew more rapidly in rich households than in poor households and that this trend accelerated after the late-1990s, both nationwide and within regions. The distribution of income and consumption was generally more equal within regions than nationwide and intra-regional distribution tended to be more equal in the Center and the West than in the East. Several studies use alternative surveys to address shortcomings in the official survey estimates, suggesting similar trends over time. They indicate that official survey estimates probably underestimate incomes but there is disagreement about the extent of urban-rural gaps. A few other studies also suggest that accounting for internal migration (ignored by most inequality measures) would greatly increase inequality in urban areas. There is also evidence suggesting the convergence of incomes among regions during the immediate post reform period to 1990 or so and the lack of convergence in the 1990s, but the evidence regarding regional distribution is also inconsistent in many respects.