PUBLICATIONS & REPORTS

Contents Introduction

This study examines the regional income disparity in China’s provinces using value-added data. The GRP (Gross Regional Product) of China’s provinces is decomposed into four value-added data components: laborers remuneration, operating surplus, depreciation of fixed assets, and net tax on production. The disparity was measured by the coefficient of variation, and the contribution to the GRP disparity was measured based on these four components. The following results were obtained: decreasing tendencies were observed in the disparity of operating surplus and that of net tax on production, while increasing tendencies were observed in the disparity of laborers remuneration and that of depreciation of fixed assets. The coefficient of variation of all value-added components is thus almost similar. In addition, the contribution to the GRP disparity of laborers remuneration has greatly expanded. These results suggest that the factor of disparity in China is shifting from operating surplus to laborers remuneration. These results are related to the gradual improvement of low income groups such as rural workers and high income groups whose success can be attributed to foreign direct investment in China and expanding business opportunities. Furthermore, estimated present and future distributions of all components tend to follow a bi-modal (richer and poorer) distribution pattern.