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 (US$2,263), while people in China's Qinghai Province earned an average of only 8,057 yuan 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 in 2005, just 25 percent of what local urban residents earned.

Increasing medical costs have become the biggest burden. The report shows that 11.8 percent of household expenditure goes to health care, higher than communications and education.

According to a survey conducted by the China Youth Daily and Sina.com.cn, Chinese people are alarmed by the gap between the rich and poor. About 80.7 percent said it was time to correct the imbalance.

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