Income Inequality and Economic Growth in China: Regional and Urban-Rural Disparities (1978–2020)

Abstract

Income disparity continues to afflict China, especially after the policy reforms adopted in 1978, which aimed to improve economic growth. This growth benefited several high-income earners and more urbanized regions, especially coastal regions, which gained disproportionately greater benefits from industrialization and market liberalization. Since the late 2000s, different governmental approaches, such as redistributive policies and infrastructural investment in rural areas, have worked together to overcome inequalities. However, these efforts have offered only a partial remedy to the menace. This study draws on research insights and statistical data, to analyse the factors of inequality such as the rural-urban divergence and regional economic imbalances. Moreover using the Gini coefficient, we explore the relationship of growth and economic inequality. The paper highlights China’s efforts to alleviate poverty and overcome this inequality which has become increasingly prevalent after the 1978 reforms. The findings thereby stress the importance of taking measures to maintain a balance between growth and equity, and bring attention to the required policies aimed at more sustainable and inclusive growth.