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The Increasing Income Inequality in China and Its Causes

also increasing with it. Even if measured by official data in which a variety of state subsidies are not counted, income inequality is now greater than during any period in the history of the People’s Republic. After twenty years of economic reform, China has changed from being almost egalitarian in the early eighties to economically polarised in the nineties. As pointed out by Khan et al., Zhao, Barmail and Jones, He, and Khan and Riskin in the nineties, income inequality in China is not significantly lower than that in Bangladesh and Korea, and is significantly higher than that in India, Indonesia, Pakistan and Taiwan.2 This is in sharp contrast to the studies of Adelman and Sunding, Nolan and Sender, and Cornia, who say that income inequality in China was low in the early eighties.3 Unlike East European countries and the former USSR, republics where income gaps between the rural and urban sectors were absent or negligible, income inequality in China is pronounced in terms of urban-rural income differentiation.4 Though the enlargement of the income gap is accompanied by a rapid growth of the Chinese