The Trend of Regional Income Disparity in the People’s Republic of China

Abstract

Based on recent updated statistical data that has become available since the People’s Republic of China (PRC) implemented its first national economic census in 2004, this paper studies the trend of regional disparity both among and within the provinces of the PRC from 1978 to 2005. We find that compared with the 1990s, the expansive trend of inter-provincial disparities has slowed down and started to decrease somewhat since 2000. In 2004 and 2005, some statistical indicators, such as per capita GDP and per capita household consumption at current prices, show that regional disparities have declined to a certain extent. In addition to the great disparity among provinces, disparities within provinces are also very common in the PRC. Judged by some measurement indexes, income disparities within many provinces have even exceeded inter-provincial disparities. The results of decomposing the regional disparity into within-group and between-group components suggested that the urban-rural disparities are the main source of regional disparities. The results further suggested that disparities among the PRC’s four regions, especially between the eastern region and the other regions, are mainly to blame for interprovincial disparities. Finally, this paper finds that changes in regional disparities in recent years can be attributed to many factors, including policies and regional specific factors as well as some cyclical factors. For this reason, we still cannot claim that the PRC’s regional disparities have started a decline that will continue.