Income Inequality during China's Economic Transition

Abstract

The primary motivation for China's economic reforms was to increase economic growth and raise living standards after nearly twenty years of stagnation. Given the move to more market-based income determination, the reforms had the potential to conflict with inherited egalitarian-motivated socialist institutions and rhetoric. To what extent have the reforms led to widening inequality? Who have been the winners and losers? Have the reductions in poverty that accompanied growth been sufficient to alleviate concerns over inequality? Do increases in inequality threaten the long-run sustainability of the reforms? Are there identifiable patterns in the evolution of the income distribution that suggest potential policy responses?