Moreover, these indicators are not immutable, if promoting economic growth

is not associated with ensuring social security and justice, it is unlikely to reach
sustainable development. In calculating rich and poor disparity, social division
consists of five income groups: 20% high, 20% well, 20% medium and 20% poor.
Without appropriate measures to promote the 20% poverty group, such as
conducting programs of social welfare policy and poverty reduction, and
preferential programs for the disadvantaged areas, in accompany with economic
restructuring solution to shorten the income gap between regions and between
sectors in the economy, the rich-poor gap will defenitely continue growing.
II. China's experience in reducing the income gap
Followings are some major learnt lessons withdrawn from the analysis in the
working-paper:
It possible to see that the formation and increase of the rich and poor gap
between urban rural areas in China is resulted from unproper development
policy. In particular, the government is responsiblle for such mistakes. In other
words, the gap between rich and poor in general, and differences between urban rural areas in particular, are not the result of marketization process. The
intervention of government in development planning, overconcentrating in urban
areas, the persistent inhabitant registration regime of peasant household variables
have turned peasants into "second classed citizens"; furthermore, weaknesses in
regulatory functions of income redistribution, etc. .. is the basic cause ofsuch
disparity. So, basic directions in narrowing the rich-poor gap in urban - rural
should focus on institutional reform and governmental management reform. In
particular, it is necessary to direct governments transitional and/ or consumption
expenditures to non-economic projects (i.e.: investments in education, health care
in rural areas, subsidies for farmers, and welfare system, etc. ..).
To allow free demographic movement , and to remove inhabitant registration
regime will enable rural people to settle down and enjoy the social policy as urban
residents. This is a small but important and practical step to create equal
opportunities for rural people, and abolishing urban rural discrimination.
There is an intimate relationship between levels of industrialization, urbanization
and urban rural wealth gap.
In general, the acceleration of urbanization process is conducive to narrowing
wealth gap between urban and rural areas in China.

CIEM, Trung tm Thng tin T liu