Urban rich-poor gap at alarming levels
(Reuters)
Updated: 2006-02-06 19:21

The gap between rich and poor in China's cities has reached alarming levels, the main economic planning agency says in the latest high-level warning of the inequalities spawned by breakneck growth.

The National Development and Reform Commission (NDRC), issuing the results of a study on income inequality among urban residents, said the wealth gap in China's cities was now "unreasonable," the official Xinhua news agency reported.

The poorest fifth of urban residents received only 2.75 percent of total income in urban areas, whereas the richest fifth commanded 20 times as much, Xinhua said.

The agency's alarm underlines the fact that the rich-poor gap, long a source of concern for policy makers worried about maintaining social stability, is much more than a town-country divide.

The government's new five-year plan, due to be approved by the legislature in March, stresses the importance of creating a more equal society. But official comments have tended to focus on the income gap between cities and the countryside.

The NDRC said the country's overall Gini Coefficient, a measure of inequality in which a value of zero represents perfect equality and reading of one means perfect inequality, stood at around 0.4, the value generally considered to represent alarming levels of inequality.

It said inequality was steadily growing, and that the Gini Coefficient could actually be higher, as some income from high-income groups goes unreported, according to Xinhua.

The World Bank estimates it at 0.45.

The NDRC attributed the growing urban income gap to differing pay scales among industries, inequality between employers and employees and increasing numbers of people with second incomes.

Xinhua cited unnamed NDRC officials as saying the government would use tougher measures in coming years to promote equality. It did not specify what those would be.

Premier Wen Jiabao said recently the government would seek to improve medical care and social welfare, which have provoked rising complaints from Chinese citizens.

Beijing has already doubled individual income tax thresholds and scrapped the centuries-old farm tax to try to ease the burden on the country's poor, but officials say more needs to be done.