Rising Inequality in China and the Move to a Balanced Economy
Zhu, Cuiping; Wan, Guanghua | January 2014
Abstract
China faces serious external (i.e. trade) and internal (i.e. structural) imbalances. Both are related to income inequality, reduction of which will help to increase domestic demand. This paper discusses how income inequality has evolved over time. This is followed by an exploration of the consequences of high inequality. Driving forces underlying the rising inequality are analyzed before providing concrete policy recommendations. It is found that inequality declined in the early period of reform, until the mid to late 1980s, and then began a rising trend up to 2010. Major determinants of inequality include: location, institutional and policy factors, trade and globalization, and education inequality and human capital gaps along rural–urban and spatial divisions. To achieve a balanced economy and a harmonious society, development policies in China must shift from emphasizing growth to prioritizing equality. In addition, government interventions can target rural–urban disparity through rapid urbanization, and tackle regional inequality by developing financial markets, ensuring progressive allocation of fiscal resources, promoting trade and foreign direct investment in inland China, creating more formal jobs and supporting the service sector.
Citation
Zhu, Cuiping; Wan, Guanghua. 2014. Rising Inequality in China and the Move to a Balanced Economy. © Wiley. http://hdl.handle.net/11540/4277.Keywords
Agricultural And Rural Development
Development In East Asia
Infrastructure Development Projects
Institutional Development
Millennium Development Goals
Policy Development
Social Development Programs
Social Development
Rural planning
Aid coordination
Industrial projects
Infrastructure projects
Natural resources policy
Educational development
Social participation
Political participation
Community banks
Business planning
Infrastructure
Sustainable urban development
Social contract
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