Inequality in China - Trends, Drivers and Policy Remedies

32 Pages Posted: 1 Aug 2018

See all articles by Sonali Jain-Chandra

Sonali Jain-Chandra

Columbia University - Graduate School of Arts and Sciences - Department of Economics

Niny Khor

Asian Development Bank

Johanna Schauer

International Monetary Fund (IMF)

Rui C. Mano

International Monetary Fund

Philippe Wingender

International Monetary Fund (IMF) - Fiscal Affairs Department

Juzhong Zhuang

Asian Development Bank

Date Written: June 2018

Abstract

China has experienced rapid economic growth over the past two decades and is on the brink of eradicating poverty. However, income inequality increased sharply from the early 1980s and rendered China among the most unequal countries in the world. This trend has started to reverse as China has experienced a modest decline in inequality since 2008. This paper identifies various drivers behind these trends - including structural changes such as urbanization and aging and, more recently, policy initiatives to combat it. It finds that policies will need to play an important role in curbing inequality in the future, as projected structural trends will put further strain on equity considerations. In particular, fiscal policy reforms have the potential to enhance inclusiveness and equity, both on the tax and expenditure side.

Keywords: Asia and Pacific, China, Fiscal policy, Income inequality, structural change, Personal Income and Wealth Distribution, General

JEL Classification: D31, H23, H50

Suggested Citation

Jain-Chandra, Sonali and Khor, Niny and Schauer, Johanna and Mano, Rui C. and Wingender, Philippe and Zhuang, Juzhong, Inequality in China - Trends, Drivers and Policy Remedies (June 2018). IMF Working Paper No. 18/127. Available at SSRN: https://ssrn.com/abstract=3221211

Sonali Jain-Chandra (Contact Author)

Columbia University - Graduate School of Arts and Sciences - Department of Economics ( email )

420 W. 118th Street
New York, NY 10027
United States

Niny Khor

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

Johanna Schauer

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Rui C. Mano

International Monetary Fund ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

HOME PAGE: http://sites.google.com/site/ruimano/

Philippe Wingender

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States
202-623-9831 (Phone)
202-623-4199 (Fax)

Juzhong Zhuang

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

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