CHINA / National

Urbanization a solution to widening income gap
By Xiao Guo (
Updated: 2006-06-20 17:21

Deputy director of China's Ministry of Finance Lou Jiwei says farmer immigration to urban areas is a solution to quell China's widening income gap between rural and urban regions, reported on June 20.

Migrant workers stay outside a job market in Ningbo. [newsphoto/file]
His comments came just days after research conducted by the ministry found the income gap among Chinese farmers and urban dwellers is widening. 

"The mobility of people is a good way to cope with the grave situation, and the government needs to eliminate the obstacles to farmers' immigration," Lou says, adding that China has to further reform its household registration system, hukou, which results in a difference among farmers and city dwellers. Hukou are assigned according to where someone is born, but are notoriously difficult to change.

Lou says city dwellers take up most of the social welfare cash and as a result there is not enough left over to support China's 750 million farmers. "It is unfair for the farmers," says Lou.

The widening income gap, now reaching an alarming level, has been a special concern for the Chinese government who has vowed to build a harmonious country.

The Chinese government has taken measures to tackle the problem by pouring a large amount of cash into the rural areas.

"The government is expanding expenditure in the fields of education, health insurance and social relief and aid to rural areas in order to insure fair treatment for farmers," says Lou.

Data shows that China has a Gini coefficient of 0.46 between rural and urban areas. The Gini coefficient is a measure for wealth inequality, with zero indicating perfect equality and one representing inequality. A Gini coefficient of 0.5 is an alarming level of inequality.

Commenting on the near-0.5 Gini coefficient, Lou denies it will wreak havoc on China's stability, adding that the equality between the rural and urban areas have led to the expansion of the coefficient.

Chinese cities and towns are expected to absorb about 300 million people from rural areas in 20 years if the urbanization drive maintains a growth of 1 per cent annually, according to previous state media reports.

According to data released this year, China has some 940 million hukou-identified farmers, but only some 750 million still work the land. The rest have left for the cities to try and find work.


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