Mapping China's Income Inequality

The economic gap between coastal and inland parts of the country is just as important—if not more so—than the urban/rural divide.

Income inequality between different regions in China has become a growing problem. (Carlos Barria/Reuters)

China, like the United States, has an income inequality problem: the country's GINI coefficient, a measure which tracks economic equality, was 0.474 in 2012, making it more unequal than countries like Peru and the Philippines. Often, inequality in China is blamed on the country's high rural population—39 percent of China's citizens worked in the agricultural sector in 2008, a number much higher than that of developed economies. The situation isn't lost on China, either. Prime Minister Li Keqiang has unveiled a plan to urbanize the country, betting that doing so would help balance China's economy.

But there's  a lot of evidence that inequality is more than just a binary issue of urban versus rural: significant regional differences exist, too.  Using data from the 2011 China Statistical Yearbook, China-based blogger Matthew Hartzell created maps that show just how large the income gap is in the country. Here are three maps, for instance, that measure annual per capita income, urban disposable income, and rural income by province:

The first map is conventional: China's coastal provinces are relatively wealthy, and the country gradually becomes poorer the further west it goes. This is hardly an earth-shattering fact: In most countries, coastal areas are wealthier than inland areas, and it wasn't an accident that China's Communist Party initiated economic reforms along the coast before trying them in the rest of the country.

But the second and third maps reveal something a little less obvious. Urban disposable income in coastal cities is much higher than it is in the interior, and rural Chinese people, too, do better along the coast than they do in the interior. The data shows that, no matter if you're a city-slicker or a farmer, you're better off living in Jiangsu than you are in Sichuan.

So is the real divide in China between coastal and interior, rather than urban and rural? Not necessarily. Chinese economic statistics don't adequately account for internal migration, a trend involving over 100 million people each year within the country. Because each Chinese person has a hukou, a household registration document that functions as an internal passport, they are only eligible to retain social benefits in their city of origin. Therefore, those who migrate internally are essentially undocumented workers and do not count toward municipal economic statistics. As a result, Beijing's income is actually poorer than it seems, simply because so many of its poorer workers technically "live" elsewhere.

However, the hukou alone cannot mask regional disparities in China: the sort that has driven internal migration in the first place. Why do these differences exist? Uneven investment and development is one explanation, but another significant factor is internal barriers to trade: Since the first years of reform, Communist Party officials in Beijing delegated economic policy-making to provincial and local authorities, who then established tariffs and other roadblocks that slowed trade within the country. In some cases, as this report shows, Chinese provinces have even had an easier time trading with foreign countries than with other parts of China.

This doesn't mean that Premier Li's urbanization plan is necessarily a bad idea - China's economy would indeed benefit from having less of the population engaged in agricultural work - but that, in terms of the country's development, solving the east-west divide may be just as important.