china_draft2 - EC2374: Modern Economy of China Income...

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EC2374: Modern Economy of China Income Inequality in China—Its original and recent dynamics, and the impact of current economic crisis. Narinderjit Kaur Gill U072106R Koh Qin Wen U082923H Lim Shu Hui U082408H Soh Wan Wei U072011H Utsunomiya Kaoru A0067569L 1
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Content Page 1. Introduction -----------------------------------------------------------------------------------pages 3-5 2. The Pre-reform Period: Origins of Urban-Rural Disparities ------------------------pages 4-6 2.1 Under a Central-Planned Economy (1949-1978) 2.2 The Origin of Income Gap Discrepancy: The Hukou System—Rural Residents as Second Class Citizens 3. Recent Dynamics of Income Gap Discrepancy -----------------------------------------pages 6-9 3.1 Causes—Education 3.2 The Continued Entrenchment of hukou 4. Policies Implemented to combat income gap inequality ----------------------------pages 10-16 4.1 Development in rural areas (from 1979 to 1983). 4.2 Development in urban areas (from post 1984 to 1992). 4.3 From the Establishment of a Socialist Market Economy From 1992 Onwards. 4.4 `Building a Socialist New Countryside’ Campaign 5. Impact of Current Economic Crisis on Income Gap Disparity -------------------pages 16-18 5.1 Impacts on Employment 5.2 Impacts on Purchasing Power 5.3 Policies by the Central Government in Mitigating the Impacts 6. Conclusion -----------------------------------------------------------------------------------page 18 ‘Let some people get rich first’ -- Deng Xiaoping, Paramount Leader of The People’s Republic of China (PRC), 1978-1992. 1. Introduction Since China’s economic reform in 1976, the income gap inequality in China has caught the attention of many because of its rapid increase. Income gap inequality is defined as 2
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the unequal distribution of household or individual income across the various participants in an economy. China’s Gini coefficient went from 0.16 in 1978—the year of reform--shot up to 0.40 in 2000, reached the current level of 0.47 this year (CIA Factfile, 2010). A Gini coefficient is defined as the measurement of inequality in a country. It ranges from 0, where there is perfect equality, and 1, where there is perfect inequality. The income gap disparity in China deserves attention because it raises issues of whether growth is sustainable and if the average Chinese is benefitting from it. There are two types of income gap disparities in China: urban-rural and regional, but both are strongly interlinked with each other. Urban per capita income in 2009, which stood at 17,175 yuan, three times the figure in the rural areas (What’s on Xiamen, 2010). The trend of a rising income gap inequality is worrying for three reasons: One, this implies that China’s rapid growth is accompanied by a rising and unequal distribution of economic wealth. The essential concern is that such income gap disparity could be persistent and major policy changes are required to alter such discrepancies. Two, this phenomenon may give rise to eventual political
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china_draft2 - EC2374: Modern Economy of China Income...

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