China's urban-rural income gap may reach the highest in history

The income gap between urban and rural residents may be as high as 3.3 to 1. The ratio may reach 4 to 1 by 2020 should no action be taken to curb the trend, revealed Zheng Xinli. Vice Minister, Policy Research Office of CPC Central Committee at a forum on county-level economy.

In the first three quarters this year, the urban-rural per capita income gap was 3.225 to 1. The figure was 3.23 to 1 and 3.209 to 1 in 2003 and 2004 respectively.

Widening gap

Should the ratio climb to 3.3 to 1, it will be the highest in history since the opening-up reform. This means the Gini Coefficient, used to measure the gap between the rich and poor, will continue to rise.

In fact the income gap ratio is much bigger if subsidies in cash and other non-currency benefits for urban residents are taken into account, according to Prof. Li Shi from Beijing Normal University. However he noted that the income gap this year will be narrower than that in 2004, since the farmers will enjoy big income increase in the fourth quarter.

A research report by the China Academy of Social Science indicates China's income gap began to narrow from 1994, but its widening resumed as from 1997. The urban resident's income was almost three times that of farmers in 2001.

In General, the income gap has been widening since 1978.

Increase of per capita cash income of farmers is much lower than that of urban resident's disposable income. The cash income of farmers increased 12.6 percent, 4.6 percent, and 5.9 percent in 2002, 2003.

Prospect of new villages: opportunity

"Construction of new socialist villages is an important measure to curb the widening of income gap," said Zheng Xinli.

Since the launch of the program in 1970s, the urban-rural income gap ratio in S. Korea has been maintained at 1 to 08 to 0.9. In 2004, the income gap was 1 to 0.94 and the per capita GDP amounted to $14,000.

Officials from relative ministries revealed China is formulating policies that will boost coordinated development of urban and rural regions. The focus of allocation of public finance resources will shift from urban regions to rural regions.

Ministry of finance has put forward new concept: constantly increase efforts in supporting agriculture; to boost the increase of grain output and farmer's income through various methods, and work out measures to alleviate difficulties of finance at county and village level; give more inputs in education, medical service, health, cultural undertakings in rural areas to promote all-round development.

Chinese premier Wen Jiabao revealed recently China will exempt all tuition fees for compulsory education in rural areas within two years. He described the popularization of compulsory education in rural areas as "the most import in development of education".

By People's Daily Online