Comparison of China’s major regions, detailed below, shows that in official GDP per
capita terms and for rural income and consumption, disparities appear large. Furthermore, both
over 20 years and over the 2000-05 five-year period, Chinese rural income and consumption
disparities have increased, as measured by the ratios of per-capita rural household statistics
representative for major regions. In other words, regional rural household income and
consumption levels in China are diverging (at least through 2005) and have been, whether
measured since 1985 or 2000.
Although disparities are growing, the extraordinarily rapid improvement in rural
household income and consumption levels in all regions over both longer-term (1985-2005) and
more recent (2000-2005) periods is notable. Average annual real growth in rural household
income was at least 6.0 percent for all seven regions over the period 1985-2005, and for
consumption the corresponding average growth rate was at least 6.5 percent over all regions.
Appreciation of this sustained speed of improvement in well-being in all regions and provinces
must heavily influence evaluation of both the causes and consequences of observed levels and
trends in inter-regional inequality.
Poverty comparisons between a coastal and an interior province show that measuring
poverty differences as part of the analysis requires careful selection of a relevant poverty line. Finally, the analysis presented below concludes that the levels and trends in regional
inequality are healthy parts of China’s successful economic reform program. They furthermore
provide essential incentives for voluntary labor migration from low-productivity areas to highproductivity
and higher income work opportunities in other regions. The inequality trends also
indicate that China’s high internal migration period is not over and that equilibrating
convergence must be a long time away. In the meantime, China should continue to provide the
essential complementary investments and reforms needed to facilitate migration set in motion in
part by the very inequalities themselves.