Regional inequality in China: an overview

This document brings together a selection of papers carrying out a systematic investigation into the nature and evolution of regional inequality in China. It contains a brief conceptual consideration of spatial inequality, reports on what has been happening globally, and discusses trends in regional inequality and policy responses to these trends.

It is argued that China’s spectacular growth and poverty reduction has been accompanied by growing inequality which threatens the social compact and thus the political basis for economic growth and social development. The regional dimension of inequality - rural/urban, inland/coastal and provincial - dominates in a country as large as China, and especially with its particular history. Inequality between different regions is now recognised to be a major issue for China’s policy makers. But such inequality, or spatial inequality - between spatially distinct areas within a country - is equally a major issue for all countries and for their policy makers.

Concluding recommendations include that:

• despite fast growth and falling poverty, regional disparities are increasing
  
• if China wishes to continue along the current globalising path to development, and if at the same time it wishes to manage and mitigate widening regional disparity, it must improve public investment in the lagging regions
  
• making migration easier to the fast growing regions, and institutional innovation to improve the performance of fiscal decentralisation would also assist in this goal
  
• targeted social protection should also be used to help the poor in short run to meet their immediate needs and to help them to participate in the growth process in the long run - this is the overall stance that will be needed to ensure that growing regional inequality does not end up as a break on Chinese development.