China suffers widening income gap

Updated: 2007-01-07 18:08

A report by the Chinese Academy of Social Sciences (CASS) shows that China's worrisome income gap is showing no signs of narrowing despite government efforts to bridge it.

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China's income disparity is close to that of Latin America's, says the CASS report which investigated 7,140 households.

Growing at double-digit rates China's economy has become the world's fourth largest, yet it is grappling with the disparity between the haves and have-nots, which has widened dramatically over the past 20 years.

The richest 10 percent of Chinese families now own more than 40 percent of all private assets, while the poorest 10 percent share less than two percent of the total wealth.

In 2005, the average annual per-capita income of urban residents in Beijing was 17,653 yuan (2,263 US dollars) while people in China's Qinghai Province earned an average of only 8,057 yuan (1,033 US dollars) a year, government statistics show.

The gap between urban and rural residents is even larger. Farmers in Qinghai reported an average annual per capita income of 2,165 yuan (277 US dollars) in 2005, just 25 percent of what local urban residents earned.

Increasing medical costs have become the biggest burden facing Chinese people. The report shows that 11.8 percent of the household expenditures go to health care, higher than communications and education.

According to a recent survey jointly conducted by the China Youth Daily and, nearly 90 percent of Chinese people are alarmed by the the gap between the haves and the have-nots.

About 80.7 percent said it was time to correct the imbalances, while only 14.1 percent believed "there is no need to change."

China's government has made narrowing the income gap one of its top priorities and a corner stone to building a harmonious society.

China's Gini Coefficient, an indicator of income disparity, has reached 0.496, according to the report carried by Elite Reference, a weekly newspaper run by the China Youth Daily.

The Gini Coefficient uses zero to indicate equal income distribution while one represents the largest income disparity.

According the World Bank, China's Gini Coefficient was 0.45 in 2005. The index in India is 0.33, the United States 0.41 and Brazil 0.54.

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