In particular, the patterns and trends of inequality between the county-level units within the provinces are virtually unknown. In order to get a full grasp on the pattern and dynamic trend of the inequality between the county-level units, the data utilised must be continuous and gathered over a long time span. This article presents the finding of one such study completed recently.
Our study is based on a dataset of real Gross Regional Product per capita for the counties and county-level cities in China, and does not include districts. Our figures show that inequality between the inland and coastal regions registered a decrease in its contribution to overall inequality over time, but a 4 per cent increase in overall inequality can still be explained by the increase in inequality between inland and coastal regions. This information is quite revealing. It suggests that inequality between the inland and coastal regions increased in the study period (1997–2007), but the increase was not as dramatic as the impact of other components and hence led to a decline in its total contribution.
The contribution of inequality between city and county subgroups within all Chinese provinces exhibited a similar trend. While this subgroup’s contribution to overall inequality declined it still contributed to 12 per cent of the increase in overall inequality. This area should thus not be overlooked and efforts should be made to mitigate these intra-provincial inequalities.
Jiangsu made the largest contribution to overall inequality in 2007. Previous studies show Jiangsu contributes considerably to the income disparity within the Yangtze River Delta and that its contribution is growing. Other large contributors in 2007 were Hebei, Henan, Inner Mongolia and Zhejiang. Together these top-five contributors are responsible for 63 per cent of the inequality in China.
These provinces are situated close together, implying that spatial factors play a major role in inequality in China. Inter-county inequality in Hebei, Henan and Inner Mongolia dominates each province’s contribution to overall inequality while inter-city inequality in Jiangsu is the most important contributing factor. Inter-city inequality within Fujian, Guangdong, Hebei, Zhejiang, Henan and Xinjiang also contributes greatly to overall inequality. Most of these provinces belong to the eastern zone.
The great disparity among the cities in the eastern zone further reinforces overall inequality. The inequality between city and county subgroups in Fujian, Hebei, Jiangsu, Zhejiang, Henan and Xinjiang contribute significantly to overall inequality. Four of these provinces belong to the eastern zone.
Increases in inter-city inequality accounted for 16.9 per cent of all increases in inequality within China, while increases in inequality between the city and county subgroups accounted for 8.3 per cent. This implies that more than one-quarter of the increase in inter-county inequality in China could be due to the increase in intra-provincial inequality in Jiangsu. Increases in inter-county inequalities in Hebei and Inner Mongolia also contribute significantly to overall inequality. These three provinces combined contributed to about 47 per cent of the increase in overall inequality. This means that if the levels of inter-county inequality in these provinces remained unchanged during the study period then the overall increase in inequality in China would have been reduced by nearly one-half.
According to our data, inter-county inequality in 2007 contributed to more than 50 per cent of the intra-provincial regional inequality in Anhui, Hunan, Jiangxi, Gansu, Guangxi, Guizhou, Inner Mongolia, Sichuan and Yunnan. These provinces are all in the central and western zones. The inter-city component contributed to more than 50 per cent of intra-provincial regional inequality in Guangdong, Jiangsu and Jilin. Both Guangdong and Jiangsu are in the eastern zone. Inequality between city and county subgroups contributed to about 67 per cent of intra-provincial regional inequality in Qinghai, which is in the western zone.
Our study finds that intra-provincial regional inequality contributed roughly 60 per cent of China’s overall inequality in 2007. Intra-provincial regional inequality is thus the primary driver of regional inequality in China. Efforts to alleviate the inequality problem are best directed at this area.
These results are important for policy makers because they suggest that inequality alleviation might need a local rather than national approach. Our results show that immediate action is needed in at least three provinces: Jiangsu, Inner Mongolia and Hebei. These three provinces together contributed to about 47 per cent of the increase in overall inequality in China during 1997–2007.
Our data also show that the evolution of regional inequality in each province has its own characteristics and patterns. It is thus necessary for provincial governments to formulate province-specific policies for the county-level units. For instance, the provinces in the central and western zones should focus more on inter-county inequality, while the provinces in the eastern zone should concentrate on both inter-county and inter-city inequalities. The provinces in the northeastern zone should focus on inter-city inequality. The provinces of Fujian, Jiangsu, Henan, Guizhou and Qinghai should pay special attention to inequality between city and county subgroups.
Tsun Se Cheong is Research Associate at the Business School, University of Western Australia.
Yanrui Wu is Professor at the Business School, University of Western Australia.
Tsun Se Cheong and Yanrui Wu’s research was presented at China Update 2012. The annual China Update conference is hosted by the China Economy Program in collaboration with the East Asia Forum at the ANU in July. This article is a digest of the author’s chapter in Huw McKay and Ligang Song (eds.), Rebalancing and Sustaining Growth in China (ANU E Press, 2012), available in pdf here. This book is the latest publication in the China Update Book Series, launched at the China Update conference every year.