October 31, 2005

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If China's West had received a yuan for every word written about the growing income gap between the interior rural poor and their richer coastal urban dwelling cousins, there wouldn't be a gap. The SCMP notes a report that incomes are rising in China's West, just not as quickly as on the coast (chart below the jump):

The wealth gap between the nation's east and west has widened in the five years since an ambitious strategy to close the economic divide was introduced, according to a study by the Xian-based Northwest University.

Although the researchers found the west was growing richer and people were better off, one academic who took part in the study said the push to develop its natural resources had instead profited the east. He suggested that altering the tax system would better address the imbalance..."Some people think it's not reasonable to support the west, because from a purely economic perspective the rewards for investment are higher in the east than in the west," he said. "But developing the west will be beneficial to the stability of the entire nation and could create a big market for east and central China, which will eventually affect their development."

But Professor Zhang, who heads the Shaanxi Academy of Social Sciences' economics institute said it was not fair for the east and west to compete directly in the market. "It's like having men and women competing in the same event, which is not fair," he said. "To develop the west under the market economy system, a pro-west market must be established."

Yes, Communist China's rich are getting richer and poor are getting richer, just not as quickly. I like Professor Zhang's analogy. One could also compare the East-West gap with the East Asia Games, which seems to be a giant waste of time for everybody involved despite grandiose white elephants infrastructure projects, where the talented, skillful, bigger and better athletes are dominating the competition.

eastwestgap.jpg

posted by Simon on 10.31.05 at 09:57 AM in the China economy category.




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