journal article · web view2018/05/28 · gni per capita (formerly gnp per capita) is the gross...

Social Tensions in a Growing China

Nanak Kakwani Shi Li Xiaobing Wang Shanshan Wu*

Abstract

In spite of fast growth and increasing average income levels, China’s

development has been uneven across various sectors and regions. This uneven

development has reduced the life satisfaction of many people and has caused social

tensions. Using four rounds of the Chinese Household Income Project data, this paper

investigates social tensions caused by inequality, poverty and polarization across rural

and urban areas, and across the Eastern, Central and Western regions, and between the

emerging super provinces/megacities and the rest. It shows that although tensions

have been significantly alleviated by fast economic growth, the impact of growth

imbalances is still very severe. China should focus on more balanced growth in

addition to a high rate of growth.

JEL classification: I32; I38; O12; O18

Keywords: Poverty; Inequality; Social Tension; Welfare; China

_________________________* Kakwani, China Institute for Income Distribution, Beijing Normal University, No. 19, XinJieKouWai St., HaiDian District, Beijing 100875, China, and School of Economics, The University of New South Wales, Sydney, NSW 2052, Australia; Email: [email protected]; Li, China Institute for Income Distribution, Beijing Normal University, No. 19, XinJieKouWai St., HaiDian District, Beijing 100875, P. R. China. Email: [email protected] ; Wang, Department of Economics, The University of Manchester, Oxford Road, Manchester M13 9PL, UK, and School of Economics, Renmin University of China. Email: [email protected] ; Wu, China Institute for Income Distribution, Beijing Normal University, No. 19, XinJieKouWai St., HaiDian District, Beijing 100875, China. Email: [email protected] ; The authors would like to thank Yangyang Shen, Nick Weaver, Ning Xue and seminar participants at Beijing Normal University, Institute of Population and Labour Economics at Chinese Academy of Social Sciences, University of Manchester, and Renmin University for useful comments and suggestions.

1

mailto:[email protected]




1. IntroductionWith significant economic achievements in both GDP and living standards,

China has lifted hundreds of millions of people out of poverty since 1978. However,

the rural-urban divide and regional inequality have both increased dramatically. The

fruits of economic development have not benefited the people of China equally, which

has led to a higher degree of social tension and even social unrest. This social tension

might not only threaten China’s future growth but also significantly reduce people’s

welfare. This paper analyses China’s social tension through an analysis of poverty,

inequality and polarization.

China had been growing at nearly 10 percent per annum for more than 30 years

before 2012, and even when slowed down after 2012, the growth rate has been still

above 6.5 percent. China’s total GDP measured by Purchasing Power Parity (PPP)

surpassed the US in 2015 and is predicted to become the world’s largest economy in

terms of GDP at market exchange rates within the next decade. China’s per capita

GNI has grown from US$200 in 1978 to US$8,260 in 2016* (World Bank 2017).

China has been successfully transformed from a weak peasant economy to a higher

middle-income country. However, in spite of this achievement, it is facing various

economic and social challenges. Inequality has, for much of the recent period, been

high with a Gini coefficient being above 0.47 (National Bureau of Statistics, various

years). There has been both a substantial rural-urban divide and a regional divide in

income, consumption, education, healthcare, pensions and many other indicators of

the standard of living (Li et al. 2013, Wang et al. 2013; Wang et al. 2016). These gaps

might contribute to substantial social problems and social tension.

China’s achievements in alleviating poverty are evident. The success in poverty

reduction is inextricably linked to the rapid economic growth and the government’s

poverty alleviation programs. In 1978, the vast majority of China’s population earned

less than the World Bank’s poverty line, measuring extreme poverty, of $1.90 per day

in 2011 PPP dollars. China has only 42 million people living in poverty in 2017 and is

on trend to eradicate extreme poverty in 2020. (Kakwani et al 2018)

At the beginning of the reform period, people were equally poor, and China was

often seen as an egalitarian country. The national Gini coefficient of income in the

* GNI per capita (formerly GNP per capita) is the gross national income, converted to US dollars using the World Bank Atlas method, divided by the midyear population.

2

early 1980s was only about 0.30. However, since then, China’s inequality has

increased dramatically with the Gini coefficient reaching 0.49 in 2008 according to

the China’s National Bureau of Statistics (NBS). This is substantially higher than

0.40, the international alert line suggested by UN Habitat. Since 2008, the Gini

coefficient has declined to around 0.47.† Regarding urban and rural areas, the income

gap between rural and urban areas in China has been on the rise. The Gini coefficient

within rural residents increased from 0.26 in 1980 to 0.40 in 2013, and that within

urban areas increased from 0.16 in 1978 to 0.39 in 2013 (NBS). Despite the high

economic growth, the increasing inequality in China implies that not everyone has

enjoyed the fruits of the reform and growth equally. While growth increases people’s

welfare, inequality may reduce the welfare of the poor and may induce social tension.

There have been tens of thousands of public protests and incidents in the 2000s,

and the Chinese government has made tremendous efforts attempting to alleviate

social tensions, but many of their policies have not been effective. Many of these

problems can potentially slow down the growth and even derail China’s growth,

making China fall into the middle-income trap.

In order to examine these issues, we need consistent measures of indicators for

these various dimensions of inequality, poverty and polarization across time. It is also

essential to understand the emergence of China’s middle class. There have been many

claims of about social immobility due to lack of opportunities, and other problems

including high and increasing living cost in big cities and differential access to quality

education.

Sen (1999) argues that development should be viewed as an effort to advance the

real freedoms that individuals enjoy, rather than simply focusing on metrics such as

GDP or income-per-capita. Other factors such as poverty and inequality also affect

social welfare, as these have impact on the capabilities and freedom of people.

A lot has been written on social welfare, poverty and inequality of China, there

has been very little research on social tension. This is an area that concerns the

stability of the society and the sustainability of economic development. A better

understanding of the evolution of social tension is of significant importance for any

developing countries, especially the transitional economics like China, where the

society is under dramatic change. If not well managed, social tension can translate

† The Gini coefficients of income are 0.474, 0.473, 0.469, 0.462, and 0.465 from 2012 to 2016 respectively according to NBS.

3

into social unrest and social turmoil.

This paper aims to derive social welfare functions that explicitly incorporate

judgments about various types of social tension. Such social welfare functions provide

the basis for the measurement of social tension. We apply these social welfare

functions in China’s case with an empirical analysis of levels and trends of various

types of social tension in the country from 1995 to 2013, using data from a national

household survey called the Chinese Household Income Project (CHIPs).

The rest of the paper is organized as follows: section 2 discusses methodologies.

Section 3 describes the data used in this paper. Section 4 provides the results and

analyses the possible causes of social tension. Section 5 concludes and hints at some

possible policy implications.

2. Assessing Social TensionSocial welfare and social tension can be caused by many non-income factors such

as a malfunctioning justice system, insecurity, and discrimination in society.‡

However, this paper focuses on the measure of social tension in income space.

An individual’s utility can be measured by three approaches (see for example,

Boyce et al, 2010). The absolute utility theory argues that higher income leads to

higher utility, and comparison in utility can be drawn from comparison in absolute

income. It argues that money and happiness are assumed to be causally linked, and

higher incomes should lead to greater happiness. The second approach is the

reference-income hypothesis which suggests that individuals care about how their

income compares with the norm, or reference income, of a socially constructed

comparison group. Individuals gain utility to the extent that their income exceeds the

average or reference income of people in their comparison set and lose utility to the

extent that their own income falls below the reference level. The third approach is the

rank-based utility theory, where people gain utility from occupying a higher ranked

position within an income distribution rather than from either absolute income or their

position relative to a reference wage.

Although absolute utility is important, the relative utility of the second and the

third approaches dominate the models of income comparison. Social comparison is

‡ By incorporating consumption, leisure, mortality, and inequality, Jones and Klenow (2016) propose a summary statistic for the economic well-being of people, they found that while welfare is highly correlated with GDP per capita, deviations are often large. Each component plays a significant role in accounting for these differences.

4

likely to arise from a concern about relative or ranked position in income distribution.

As rank of income significantly affects life satisfaction, increasing an individual’s

income will improve his or her utility only if ranked position also increases and will

necessarily reduce the utility of others who will lose rank (Rablen, 2008; Boyce et al,

2010). If an individual’s utility derives from relative or ranked positions within a

comparison group, as well as from absolute amount of wealth, inequality and

polarization would have significant impact on people’s welfare and on social tension.

Social welfare depends on mean income and its distribution. The maldistribution

of income provides the measures of social tension. Specifically, this paper studies uses

uneven income distribution, poverty, and polarization to explain the seriousness and

the changes of social tension in China. Each dimension is analysed individually to

identify the type of social tension that has an increasing or decreasing trend over time.

An increasing social tension can become a source of social unrest, so it is imperative

to measure trends in individual social tensions.

2.1 Social Tension Caused by Inequality

Inequality is one source of social tension. Social tension due to inequality can be

measured using the Gini social welfare function, which gauges how much relative

deprivation the society suffers. Individuals lose their welfare when they find out that

their income is lower than others. We derive a Gini social welfare function that is

interdependent and captures the idea of relative deprivations suffered by individuals

across different levels of income.

An individual with income x compares her income with all other individuals in

the society. She selects other individuals one by one and makes all possible

comparisons. Suppose she selects an individual with income y and feels deprived

upon discovering her income x is lower than income y. She therefore suffers a loss of

welfare. There is no loss of welfare if her income is higher than the compared income.

That is, when x≥ y，The welfare of an individual, with income x, when she compares with another

individual, with income y, is given by:

u ( x , y )=x if x≥ y

u ( x , y )=x−( y−x )if x< y

5

Suppose the income x of an individual is a continuous random variable with mean

μ and probability density functionf ( x ). Then, in all pair-wise comparisons, her

expected welfare denoted by u ( x ) is obtained by:

u ( x )=x−u [1−F1 ( x ) ]+x [1−F ( x ) ]（1）

where F ( x )is the distribution function, which is interpreted as the proportion of

population with income less than x. F1 ( x ) is defined as

F1 ( x )=1u∫0

∞

xf ( x )dx

which is the proportion of income enjoyed by individuals with income less than or

equal to x.

Differentiating this twice gives

u' (x )=2−F ( x )

u' ' ( x )=−f ( x )

which implies that the individual’s (expected) welfare is an increasing function of

income and is concave. This is the basic requirement of any utility function.

The average welfare of the society is then obtained as

W G=∫0

∞

u ( x ) f ( x ) dx=2∫0

∞

x [1−F ( x )] f ( x )dx=µ (1−G ) (2 )

where µ is the average income, G is the Gini index, and µ (1−G ) is the Gini

social welfare function. The average deprivation suffered by the society is measured

by the Gini index, which can be viewed as a proportional loss of social welfare. Thus,

the Gini index is a measure of social tension caused by inequality in the society.

2.2 Social Tension and Poverty

The poverty line specifies the society’s minimum standard of living. The non-

poor are assumed to not suffer any deprivation. An individual suffers deprivation,

which results in loss of welfare, when her income is less than the poverty line. The

welfare of an individual with income x is given by

w ( x )=x−g (z , x )if x<z

¿ x if x ≥ y

6

where z is the poverty line and g ( z , x ) is the deprivation suffered by the poor.

Given this, the average welfare of the society can be given by

W =μ−∫0

z

g ( z , x ) f ( x )dx

where μ is the mean income of the society. The second term on the right-hand side of

refers to social deprivation due to poverty.

Following Kakwani and Son (2016, ch3), the average welfare of the society can

be written as

W α=μ−Hz( θα

H )1α (4)

Where θα is the FGT class of poverty measures (Foster, Greer and Thorbecke, 1984)

given by

θα=∫0

z

( z−xx )

α

f ( x )dx (5)

where is the parameter of inequality aversion. Forα=0 , θ=H , that is the head-

count ratio. This measure gives equal weight to all the poor irrespective of the

intensity of their poverty. For α =1, each poor person is weighted by his or her

distance from the poverty line, relative to z. This measure is called the poverty gap

ratio. For =2, the weight given to each poor is proportional to the square of his or

her income shortfall from the poverty line. This measure is called the severity of

poverty ratio, which has the desirable property of being sensitive to the distribution of

income among the poor, thus making poverty sensitive to income transfers among the

poor.

W α in equation (4) shows that there is an implicit social welfare function for each

member of the FGT class of poverty measures, except the headcount ratio. The second

term on the right-hand side of equation (4) is the welfare loss due to the existence of

poverty. Given this, the proportional loss of social welfare due to poverty can be

obtained from (4) as

Pα=z Hα−1

α ¿¿

which is the proposed measure of social tension because of poverty. The measure of

7

social tension for the poverty gap ratio is obtained by substituting α =1 in equation

(6) as

p1=zθ1

μ(7)

where θ1 is the poverty gap ratio. Similarly, a measure of social tension for the

severity of poverty is obtained by substituting α =2 in equation (6) as

p2=z √H θ2

μ(8)

where θ2 is the severity of poverty ratio.

Note that inequality-neutral growth does not change the relative social tension

measures caused by inequality in the society such as the Gini index. Thus, inequality-

neutral growth reduces the poverty tension, but has no impact on the inequality

tension.

Ideally, society should aim at reducing both inequality and poverty tensions, but

such a scenario is not very common in developing countries. As we will show later in

China inequality has been increasing at the same time that poverty has been declining

rapidly.

2.3 Social Tension and Polarization

A society is said to be polarized when it is divided into groups with substantial

intra-group homogeneity and inter-group heterogeneity. Based on this definition,

Esteban and Ray (1994) identified two distinct notions of polarization. The first is

alienation, which measures how far apart different groups are. The second is

identification, which measures how closely the members of a group are aligned with

each other, sharing common aspirations and values. Social conflicts may potentially

arise due to the existence of such groups.

The concept of polarization is directly linked to social tension. However, the link

between social welfare and polarization has not been well discussed in the literature.

To measure social tension, this section derives a social welfare function that embodies

the essential elements of social tension caused by polarization.

The notion of alienation is measured by the degree of spread from the middle

position (median) to the tails of the income distribution. A larger spread from the

median implies a smaller middle class and larger polarization, whereby the rich

become richer and the poor become poorer. This causes social tension. The social

8

welfare function that incorporates the idea of alienation is derived as follows.

A person is assumed to be alienated if her income deviates substantially from the

middle. Suppose m is the median income, then her alienation is given by the

difference between the individual income and the median. The utility that takes

account of alienation from the median may be defined as:

u ( x )=x−(m−x ) if x<m

u ( x )=x−( x−m) if x>m

Thus, the average welfare of the society is obtained as

W A=u−m2−m1

2(9)

where m1 and m2 are the mean incomes of the population having income below and

above the median income, respectively. W A is the social welfare that accounts for

alienation in the society. The proportional loss of social welfare due to alienation is

given by

A=m2−m1

2u(10)

The larger the A, the greater is the alienation in the society. A is the proposed measure

of social alienation.

The second aspect of bi-polarization refers to the case where incomes below the

median or above the median become closer to each other. The polarization increases

when the two groups become homogeneous.

Following Kakwani and Son (2016, ch3), the proportional loss of social welfare

due to polarization is given by

B=2 ( A−G )(11)

where A is the measure of social alienation and G is the Gini index. This measure can

also be expressed as

B=2 (GB−GW )(12)

where GB and GW are the between- and within-group inequalities when the two groups

are formed by the populations having income less and greater than the median

income, respectively.

9

3. Data Analysis

3.1 Data

The data used for this section is the four rounds of the Chinese Household

Income Project (CHIPs) in the year 1995, 2002, 2007, and 2013. The first two rounds

were collected by the Chinese Academy of Social Sciences and the National Bureau

of Statistics. The latter two were completed by the China Institute for Income

Distribution and the National Bureau of Statistics. §

The CHIP study is arguably the best publicly available data source on Chinese

household income and expenditures (Riskin, Zhao and Li, 2001). These data remain

the only source of household level information on income and other individual and

household characteristics that are representative of China as a whole. (Gustafsson, Li

and Sicular, 2008).

The CHIP sample is a subset of a larger survey done by the National Bureau of

Statistics (NBS) and the income data from NBS are more detailed and accurate. The

general practice in previous studies is to use the National Bureau of Statistics records

for income data.

Since the cost of living varies across provinces, in order to improve the

comparability of data, we adjusted income by deflating the incomes by the spatial

price indices for different provinces of China (where the numeraire equals a national

average consumption basket). The 1995-2007 income data were adjusted using CPI

and regional PPP with 2013 as base year. Thus, our welfare measures are the real per

capita disposable household income.

3.2 Descriptive Data Analysis

Table 1 shows the average income of three geographic regions, and rural and

urban sectors within these regions.** From 1995 to 2013, the national income level of

the whole population is on the rise. In 1995, the average national income per capita

was 4,111 yuan, and the per capita income of the households in 2013 was 18,781

yuan.

The per capita income gap between rural and urban was growing before 2007 but

§ Table A1 in the appendix shows the inclusion of the specific provinces in the four rounds.** See Wang et al (2013), and Rangazas and Wang (2018) for the discussion on China’s Hukou system and the characteristics of rural-urban divide and regional divide.

10

has subsequently begun to narrow. In 1995, the average per capita income of urban

residents was 7,301 yuan, which was 2.6 times of rural per capita income (2,796

yuan). In 2013, the income of urban residents was 2.80 and 1.38 times of that of the

rural residents (9,914 yuan) and migrant workers (20,077 yuan), respectively.

Figure 1 compares the regions graphically and shows the percentages of average

household income per capita in the Western and Central regions, comparing to the

Eastern region. As can be seem, the per capita income gap in the Eastern, Central and

Western regions widened from 1995 to 2002, and narrowed in 2002-2007, but the gap

widened again after 2007. The per capita income in the Western and Central regions

was about 61%-66% and 52%-62% of the Eastern regions, respectively.

The per capita income of households in the Western urban areas was only lower

than that in the Central region in 2007, and the other years were higher than those in

the Central region. The income of the migrant population in the Western region is

higher than that in the Eastern region, but this income gap is shrinking.

Table 1 Descriptive StatisticsYear 　 Total East Central West

1995total 4,111 5,316 3,436 3,250urban 7,301 8,719 5,713 6,645rural 2,796 3,546 2,576 2,156

2002

total 6,123 8,143 5,003 4,703urban 10,799 12,764 8,777 9,682rural 3,667 4,985 3,263 2,680migrant 9,087 9,909 6,875 8,306

2007


2013


Note: using 2013 as base year and adjusted using PPP.

Figure 1. Sectoral and Regional Comparisons of Income as a percentage of Eastern

11


12

Figure 2. Growth Rates across Sectors


Figure 2 shows that there is a significant difference in income growth rates

between different sectors and different percentiles of income. On the whole, the

income growth rate of the high percentiles is higher than that of the lower percentiles

with the exception of migrants between 2002 and 2007. The total population income

growth rates of the high income population are significantly higher than that of others

in 1995-2002. After 2007, the income growth rate of higher percentiles has slowed

down. From 2007 to 2013, the growth rates of different income percentiles were

similar, with the top 10 percentile growing faster, especially in the urban sector.

The identification of reference groups is very important in the study of social

tension. In our paper, in the study of the rural-urban divide and the regional divides

our view is that rural people will compare themselves with urban people and people in

one region will compare themselves with those in another region. Migrants will

compare their incomes with those in their rural regions. However, for the migrants,

with whom they reference is not a simple question. For migrants, it is even harder to

set a reference group. Some migrants may select a certain group of urban residents as

their reference group while some other migrants may regard rural residents in their

.2.3

.4.5

.6

0 20 40 60 80 100percentile

1995-2002 2002-2007 2007-2013

Growth by percentile--total

.2.3

.4.5

.6

0 20 40 60 80 100percentile

1995-2002 2002-2007 2007-2013

Growth by percentile--urban

.2.3

.4.5

.6

0 20 40 60 80 100percentile

1995-2002 2002-2007 2007-2013

Growth by percentile--rural

0.2

.4.6

.8

0 20 40 60 80 100percentile

2002-2007 2007-2013

Growth by percentile--migrant

13

hometown as the reference group. The choices of reference groups have big impacts

on people’s welfare in terms of social tensions and subjective wellbeing. For example,

in explaining why do rural–urban migrant households settle in urban China have an

average happiness score lower than rural households, Knight and Gunatilaka (2010)

argue that migrants use their rural residents as reference group when they make

migration decisions, but their reference group changes to urban residents after couple

of years of working and living in the urban areas. Thus with their income rise, their

aspirations also change, thus their happiness level becomes actually lower.

However, as our focus is the overall welfare of sectoral (rural-urban) and

geographic reginal comparison, we focus our studies on the social tensions among

those groups. We will show the results of each of the groups and produce estimates of

social tensions so as to allow comparisons.

4. Empirical Analysis of Social Tension in China

4.1 Social Tension Due to InequalityAs discussed in subsection 2.1, the social welfare is determined by the average

income of the whole society and the size of the Gini coefficient: the higher the

average social income, and/or the smaller the Gini coefficient, the higher the total

social welfare. As such, social tension caused by inequality is measured using a social

welfare function where the Gini coefficient is used as the measure of social tension.

Table 2 reports the social welfare and social tension (as measured by the Gini

coefficient) for both rural and urban sectors for the four sample years. It can be seen

that the national income inequality and the income gap between urban and rural areas

was had widened during 1995 to 2007, and started narrowing from 2007, the income

inequalities within urban and rural areas are widening, especially in rural areas. The

national social tension (i.e., Gini coefficient) increased slightly between 1995 and

2007, and declined significantly after 2007. Gini coefficients of urban and rural

residents were always increasing. In 1995, the Gini coefficient of urban residents was

the lowest (0.29), and it rose to 0.35 in 2013. The Gini coefficient in rural areas shows

the same trend. However, the Gini coefficient of migrants increased between 2002 and

2007, decreased between 2007 and 2013. This is due to the fact that the number of

migrant increased significantly, and their skills are very diverse in nature, with some

of them having high skills and some of them have low skills, resulting a huge wage

14

gap, and hence huge income inequality.

Measured by the Gini social welfare function, China's social welfare level

increased significantly. Social welfare was only 2,401 in 1995, it reached 10,500 in

2013. This is mainly due to the sustained and rapid growth of China's per capita

income.

In 1995, China carried out large-scale SOEs reform, where some state-owned

firms were allowed to go bankrupt, and some laid-off large number of workers for the

sake of improving efficiency. Despite the large unemployment in the following couple

of years when the SOE reforms continued, the labour market structural adjusted and

there were significantly improvements in economic efficiency and increase of labour

income. Social welfare grew rapidly after 2002 when Chin joined WTO in December

2001. After 2007, there was continuous wage and income growth, partly because

China introduced the Labour Contract Law in 2008, which protects labour’s legal

rights and partly because China had crossed the first Lewis turning point, which

means the abundant labour supply at extremely low wage level was running out

(Wang and Piesse 2013, Wang and Weaver 2013).

Table. 2 Social Welfare and Social Tension by Sectors

Year Social welfare

Per capital household

incomeSocial tension(Gini index)

1995total 2,401 4,111 0.4158urban 5,197 7,301 0.2881rural 1,811 2,796 0.3524

2002total 3,420 6,118 0.4410urban 7,303 10,776 0.3223rural 2,382 3,667 0.3503migrant 5,966 9,109 0.3451



growth rate

Social welfare


incomeSocial tension(Gini index)

95--02total 5.18 5.85 0.84urban 4.98 5.72 1.62rural 4.00 3.95 -0.09

15

02--07total 10.76 12.00 1.33urban 10.45 10.98 0.96rural 6.79 7.23 0.75migrant 14.93 13.65 -2.29

07--13total 10.72 9.69 -1.10urban 7.14 7.37 0.41rural 10.34 11.36 1.51migrant 1.28 2.54 2.53

Table 3 reports the social welfare and social tension by three geographic regions:

the most developed Eastern costal region, the backward Western region, and the

Central region.†† It can be seen that the social tension in Central region is lower than

that in Eastern and Western regions from 1995 to 2013. Before 2007, the regional

social tension as a whole has been on an upward trend. However, after 2007, the

social tension in various regions showed a clear downward trend, indicating that after

2007, the social tension as measured by the Gini coefficient has eased. This is partly

due to the abolishment of agriculture tax and the introduction of basic healthcare and

a pension system, which would have significant positive effects on the poor regions.

(Wang et al 2013). In 2002-2007, there was a biggest increase of per capita family

income. The increase in the Western region was significantly higher than that in the

Eastern and Central regions after 2007. In terms of the social welfare growth rate, it

can be seen that the Eastern region was the most rapid before 2002, the Central was

slightly higher than that of the Eastern region during 2002-2007, and after 2007, the

Western region was higher than the Eastern and Central regions, with a growth rate of

12.6% per year.‡‡

†† The indicators for the national level as omitted here as they are the same as in Table 2.‡‡ See Table A2 for the analysis of social tension measured by both geographic regions and rural-urban division.

16

Table. 3 Social Welfare and Social Tension by Regions

Year 　 Social welfare


income

Social tension

(Gini index)

1995

Eastern 3,090 5,316 0.4188Central 2,249 3,436 0.3456Western 1,899 3,250 0.4158

2002


2007


2013


growth rate 　 Social

welfareSocial

tension(Gini index)

95--02

Eastern 6.30 6.26 -0.06Central 4.39 5.50 1.83Western 4.41 5.44 1.28

02--07

Eastern 11.21 12.58 1.61Central 11.31 12.68 1.77Western 9.64 10.29 0.69

07--13 Eastern 9.03 8.19 -0.98Central

9.75 9.57 -0.23

Western

12.60 11.54 -1.13

17

By looking at the Eastern, Central and Western regions, the regional differences

are salient. However, the imbalance is more severe when we look at groups of

provinces according to their development level.§§ We divide the 34 provinces in China

into three groups according to the level of per capita GDP in 2013, with the provinces

with highest GDP per capita in tier 1 and the lowest in tier 3.*** As can be seen from

table 4, prior to 2007, per capita income in the tier 1 provinces was almost double that

of tier 2 and tier 3, indicating a huge income gap between provinces. After 2007,

though the income growth rate of tier 2 and tier 3 groups has been higher relative to

tier 1, the income gaps between provinces are still huge. Social tension, measured by

the Gini coefficient, declined after 2007; Social welfare in tier 1 province was much

higher than tier 2 and tier 3. However, the difference between tier 2 and tier 3 in social

welfare is relatively small. Since 2007, social tension declined significantly, but it was

still at the highest level in the least-developed tier.

Table. 4 Social Welfare and Social Tension by Tiers



income

Social tension

(Gini index)

1995Tier 1 3,448 5,804 0.4059Tier 2 1,975 3,115 0.3659Tier 3 2,078 3,358 0.3811

2002Tier 1 5,292 8,871 0.4034Tier 2 2,819 4,678 0.3974Tier 3 2,765 4,825 0.4270

2007Tier 1 8,992 15,913 0.4349Tier 2 5,092 8,859 0.4252Tier 3 4,322 7,962 0.4573

2013Tier 1 13,537 23,573 0.4257Tier 2 9,569 16,521 0.4208Tier 3 8,407 14,813 0.4325


welfare Per capital household

income

Social tension

(Gini index)

95--02Tier 1 6.31 6.25 -0.09Tier 2 5.21 5.98 1.19Tier 3 4.17 5.32 1.64

02--07Tier 1 11.18 12.40 1.52Tier 2 12.56 13.63 1.36Tier 3 9.34 10.54 1.38

§§ This feature would be more salient at the city level, but the sample sizes are too small for each individual city for us to do city-level analysis.*** In the sample, Tier 1 provinces are: Beijing, Liaoning, Shanghai, Jiangsu, Zhejiang, Fujian, Shandong, Guangdong; Tier 2 are: Hebei, Jilin, Hubei, Hunan, Chongqing, Shaanxi, Xinjiang; tier 3 are: Shanxi, Anhui, Jiangxi, Henan, Guangxi, Sichuan, Guizhou, Yunnan, Gansu.

18

07--13Tier 1 7.06 6.77 -0.36Tier 2 11.09 10.94 -0.17Tier 3 11.73 10.90 -0.93

4.2 Social Tension Due to PovertyTo study social tension due to poverty, we have to have an appropriate poverty

line. In 2010 the State Council published the 2,300 yuan new poverty line for rural

areas. Adjusted by CPI, this poverty line in 2013 is 2,736 yuan.††† ‡‡‡ The official

poverty line of 2,736 Yuan per person per year for 2013 is about 28% of the average

per capita real income.§§§

Based on equation (5), Table 5 shows the poverty incidence, poverty gap ratio,

and severity of poverty in the FGT measure based on the 2013 poverty line of 2,736

yuan. We can see that the overall poverty incidence in China between 1995 and 2013

has decreased significantly, but there are differences in the rate of decline at different

stages. The incidence of poverty fell by a rate of 6.12% between 1995 and 2002. The

rate of decline in poverty incidence reduced to 13.51 in 2002-2007, and further

reduced to 17.68 after 2007.****

We find that the incidence of poverty in urban populations in 2007 is less than the

incidence of poverty in 2013. Moreover, in 2013, income of urban residents is more

volatile. In 2013 data, many households/people have negative income. These negative

incomes may have a greater impact on the incidence of poverty. In reality, people will

be smoothing consumption, thus consumption would have a much smaller fluctuation

than income. Thus, for 2007 – 2013, urban income inequality has deteriorated, but

consumption inequality is declining. (see Kakwani et al 2018 for both income data

and consumption data.)

If the negative incomes in the sample are deleted, the incidence of urban residents

††† The income for 1995-2013 was adjusted to 2013 income by CPI and PPP for comparability between different years. Based on the new official poverty line of 2300 Yuan in 2010, the national poverty lines are 2536 yuan in 2011, 2736 yuan in 2013, 2800 yuan in 2014, 2855 yuan in 2015, 2952 yuan in 2016.‡‡‡ The poverty line published by the state is based on consumer spending as the standard. If the annual consumption expenditure is less than the prescribed poverty line, the household is identified as the poor. However, this study uses income data to estimate the poverty line (the vast majority of literature use income date because the expenditure data is not fully counted and the potential data error is larger than the income data).§§§ The 2011 PPP exchange rate for the Chinese Yuan per dollar was 3.545 in 2013, which gave the per person per day official poverty line equal to $2.11 in 2011 PPP. The World Bank has recommended poverty line of $1.90 in 2011 PPP for the extreme poor. Thus, the Chinese official poverty line is about 11% higher than the World Bank’s poverty line for the extreme poor.**** See Table A3 for the analysis of poverty measured by both geographic region and rural-urban division.

19

in 2007 was 0.48; the incidence of urban residents in 2013 was 0.46, so the negative

income in 2013 is the main reason of higher poverty incidence. ††††

The gap between the rich and the poor in 1995 was higher than that between them

in 2002 and 2007, and the poverty gap ratio was reduced by an average of 9.58% after

2007. From the perspective of the poverty gap ratio, the rate of decline is very

significant in the period from 1995 to 2007. However, the severity of poverty has

been increasing after 2007.

Table. 5 FGT Class of Poverty Measures by Sectors

Year 　 Headcount ratio

Poverty gap ratio

Severity of poverty

1995total 45.90 17.31 9.11urban 5.18 1.20 0.50rural 62.67 23.95 12.66

2002

total 29.50 9.88 4.63urban 2.38 0.52 0.20rural 44.01 14.86 6.99migrant

5.15 1.96 1.21

2007


0.34 0.14 0.11

2013


1.54 1.52 3.14

Growth rate Headcount ratio

Poverty gap ratio

Severity of poverty

95--02total -6.12 -7.71 -9.21urban -10.51 -11.22 -12.55rural -4.92 -6.59 -8.14

02--07

total -13.51 -13.67 -6.35urban -25.90 -23.44 -20.63rural -10.84 -11.10 -3.52migrant

-41.77 -41.40 -38.66

07--13 total -17.68 -9.58 17.47urban 5.09 45.98 118.10rural -16.14 -11.28 12.79

†††† The negative income may have many different causes, such as loss in family business. So this paper retains these values in calculation.

20

migrant

28.39 49.56 76.10

Based on the equations (7) and (8), we obtained the poverty induced social

tension indices in Table 6.‡‡‡‡ With regard to the poverty gap ratio and the severity of

poverty, the overall social tension is declining. The average declining trend in 2002-

2007 is greater than that of the other two adjacent periods.

The social tension of the urban residents is lower than that of the rural residents

and the floating migrant population. After all, the income of the urban residents is

obviously higher than that of the other two groups. The social tension of the migrant

population is also lower than that of the rural population, and the main reason is again

higher income.§§§§

Table. 6 Social Tension Due to Poverty by SectorYear 　 Poverty gap ratio Severity of poverty

1995total 11.524 13.61urban 0.450 0.60rural 23.435 27.56

2002total 4.416 5.227urban 0.132 0.173rural 11.091 13.084migrant 0.590 0.750



Growth rate Poverty gap ratio Severity of poverty

95—02total -12.80 -12.78urban -16.03 -16.32rural -10.14 -10.10

02—07total -22.92 -19.64urban -31.01 -30.90rural -17.09 -13.50migrant -48.44 -47.41

07—13 total -17.57 -10.35urban 35.96 41.01

‡‡‡‡ See Table A4 for the analysis of social tension measured by both geographic regions and rural-urban division.§§§§ We attribute the abnormality of the increase of social tension from 2007 to 2013 period in both the urban and the migrant sector, to the slight biased sample of richer urban sector in 2007 and the negative income problem in 2013 as discussed in the previous subsection.

21

rural -20.34 -12.67migrant 45.85 46.63

Tables 7 to 10, are similar to tables 5 and 6 but are by geographic regions and

development tiers respectively. From table 7, we can see that the incidence of poverty

in different regions decreased continuously from 1995 to 2013, and the incidence of

poverty in the Eastern, Central and Western regions rose with it rising faster in the

Central region than the Eastern and the incidence of poverty was the highest in the

Western region. The poverty gap ratio and the severity of poverty also show similar

characteristics.

For both poverty gap and severity measures, social tension is lower in the

Eastern region than that in the Central region, and that in the Central region is lower

than that in the Western region. This is mainly due to the high per capita family

income in the Eastern region. However, it can be seen that the social tension in the

Western region is declining fast, indicating that social welfare in the Western region is

constantly improving. Similar conclusions are drawn from the relative poverty

line.*****

Table. 7 FGT Class of Poverty Measures by regions

Year 　 Headcount

ratioPoverty gap

ratioSeverity of

poverty

1995


2002


2007


2013 Easter 2.40 2.08 9.43

***** See tables A5--A8 in the appendix for the results of the social tension caused by relative poverty in terms of both geographic regions and rural-urban division.

22

nCentral 4.96 2.68 5.64Western 7.21 3.33 11.80

Growth rate 　 Headco

unt ratio

Poverty gap ratio

Severity of poverty

95--02

Eastern -10.86 -12.07 -14.02Central -5.26 -6.99 -8.74Western -4.14 -6.08 -7.05

02--07

Eastern -14.34 -11.47 12.05Central -16.45 -16.67 -15.74Western -11.06 -12.61 -12.89

07--13

Eastern -16.19 -4.18 14.41Central -15.46 -6.78 20.05Western -18.50 -13.85 20.29

Table. 8 Social Tension Due to Poverty by Regions

Year 　 Poverty gap ratio Severity of poverty

1995Eastern 6.249 7.80Central 13.450 16.12Western 20.863 23.35




Growth rate 　　　95--02

Eastern -17.24 -17.61Central -11.84 -11.87Western -10.93 -10.47

02--07Eastern -21.36 -12.98Central -26.05 -25.54Western -20.76 -20.19

07--13 Eastern -11.43 -9.49

23

Central -14.92 -8.05Western -22.76 -11.23

Similarly, we discuss the incidence of poverty and the resulting social tensions

by provinces of different development levels. From Table 9, we find that the incidence

of poverty in provinces with high GDP per capita is significantly lower than that in

the other provinces. The incidence of poverty in the Tier 1 provinces in 1995 was

about half of that in the Tier 2 and Tier 3 provinces. The incidence of poverty in the

Tier 1 provinces in 2002 and 2007 was only one-third that of Tier 2 and about half to

one-third in 2013. The incidence of poverty in the Tier 3 provinces was only slightly

higher than in the Tier 2 provinces. The poverty gap ratio in Tier 1 provinces was also

significantly lower than the other two subgroups. Social tensions measured by the

poverty gap ratio and severity of poverty, also show similar features, with the social

tension in Tier 1 provinces being much lower than the other two groups, which have

similar social tensions. Tier 1 provinces have a greater chance of enjoying social

benefits, and the distribution of benefits is very uneven among provinces. †††††

Table. 9 FGT Class of Poverty Measures by Tiers

Year 　 Headcount

ratioPoverty gap

ratioSeverity of

poverty

1995Tier 1 28.72 9.92 5.66Tier 2 54.02 21.90 11.86Tier 3 54.36 20.50 10.34

2002Tier 1 11.84 3.57 1.60Tier 2 35.79 12.52 6.12Tier 3 39.33 13.18 6.10

2007Tier 1 5.03 2.19 4.34Tier 2 14.12 4.40 2.19Tier 3 21.14 6.77 3.16

2013Tier 1 2.40 2.08 9.43Tier 2 5.44 3.16 8.28Tier 3 6.12 2.87 8.29


unt ratio

Poverty gap ratio

Severity of poverty

95--02Tier 1 -11.89 -13.58 -16.49Tier 2 -5.71 -7.68 -9.03Tier 3 -4.52 -6.12 -7.26

02--07 Tier 1 -15.75 -9.30 22.04

††††† Details in relative poverty line and relating social tension are shown in table A9 and A10 in the appendix.

24

Tier 2 -16.98 -18.88 -18.58Tier 3 -11.68 -12.48 -12.32

07--13Tier 1 -11.61 -0.90 13.79Tier 2 -14.70 -5.33 24.82Tier 3 -18.66 -13.31 17.42

Table. 10 Social Tension Due to Poverty by Tiers


1995Tier 1 5.105 6.56Tier 2 17.438 20.16Tier 3 17.258 19.96

2002Tier 1 1.202 1.467Tier 2 6.849 8.097Tier 3 7.658 9.003

2007Tier 1 0.408 0.870Tier 2 1.325 1.675Tier 3 2.410 2.912

2013Tier 1 0.241 0.552Tier 2 0.551 1.168Tier 3 0.532 1.318

Growth rate 　　　95—02

Tier 1 -18.66 -19.27Tier 2 -12.50 -12.22Tier 3 -10.96 -10.75

02—07Tier 1 -19.44 -9.93Tier 2 -28.00 -27.03Tier 3 -20.64 -20.21

07—13Tier 1 -8.40 -7.30Tier 2 -13.60 -5.82Tier 3 -22.27 -12.38

4.3 Social Tension Due to Alienation and PolarizationTo better understand the changes in social tension and analysing the changes in

income, we should not only consider changes in the overall income gap and poverty,

but also consider the income gap within the entire group, including different income

distributions for different income groups. Table 11 reports a quantitative description

of the income distribution. Between 1995 and 2013, the mean income increased by an

annual average of 9.29%. The income growth of the 90th percentile was much higher

than that of the 10th percentile; the difference was the largest between 1995 and 2002,

and was the smallest between 2007 and 2013. A closer examination reveals that the

25

income inequality was larger at the lower half of the distributions between 1995 and

2013. The income inequality of the high-income population (P90-P50) increased

faster between 1995 and 2002 but changed only slightly between 2007 and 2013.

Different measures of inequality show that the income inequality kept increasing

between 1995 and 2013.

Table. 11 Means, Deciles, and Variances of Log Income, 1995-2013Year 1995 2002 2007 2013

Mean 7.786 8.181 8.839 9.459Median 7.834 8.189 8.875 9.485P10 6.760 7.102 7.686 8.317P25 7.241 7.596 8.209 8.858P75 8.359 8.797 9.488 10.095P90 8.757 9.247 9.952 10.576P50-P10 1.073 1.086 1.189 1.168P90-P50 0.923 1.058 1.077 1.091P90-P10 1.997 2.144 2.266 2.258Var 0.623 0.712 0.793 0.811Notes: This is for the whole population without separating rural and urban.

People’s welfare and the sense of happiness are often affected by the differences

among income groups, thus it is very important to study social tension caused by

income differentiation. Social tension caused by alienation and polarization may have

a close relationship with a shrinking middle class in a society. The middle class can

shrink as the society becomes more polarized. The size of the middle class can also be

adversely affected by the phenomenon of alienation. Alienation is primarily concerned

with the spread of income distribution from the median; the greater the spread, the

smaller is the size of the middle class. In addition, polarization indicates the degree of

homogeneity within the two groups. As can be seem from table 12, the growth rate of

both alienation and polarization indices are positive most of the time for most groups

with exception for migrants in 2002-2007, and total population between 2007 and

2013.

Table. 12 Social Welfare and Social Tension Due to Alienation/Polarization by Sectors

Year 　 Social welfare Alienation Polarization

1995total 1,797 0.5629 0.2941urban 4,421 0.3944 0.2126rural 1,486 0.4687 0.2326

26

2002

total 2,476 0.5953 0.3087urban 6,054 0.4382 0.2317rural 1,938 0.4716 0.2426migrant

4,871 0.4653 0.2405

2007


10,188 0.4101 0.2055

2013


10,426 0.4807 0.2471

Growth rate Social welfare Alienation Polarization

95--02total 4.68 0.80 0.69urban 4.59 1.51 1.24rural 3.87 0.09 0.60

02--07


15.90 -2.50 -3.10

07--13

total 11.68 -1.08 -1.02urban 6.99 0.41 0.41rural 9.63 1.51 1.50migrant

0.39 2.68 3.12

From Table 13 we find that neither alienation nor polarization vary significantly

between regions, with alienation roughly 0.53-0.63 and polarization between 0.25-

0.35. The social welfare measure includes income information; therefore, social

welfare in the Eastern region is higher than that in the other two regions, while the

social welfare in the Western region is the lowest. However, the social welfare in the

Western region has grown faster than the other two regions after 2007.‡‡‡‡‡

Table. 13 Social Welfare and Social Tension Due to Alienation/Polarization by Regions


1995Eastern 2,258 0.5752 0.3128Central 1,812 0.4727 0.2541Western 1,427 0.5609 0.2901

‡‡‡‡‡ See Table A11 for the analysis of social tension measured by both geographic regions and rural-urban division.

27





Eastern 6.55 -0.21 -0.62Central 3.71 1.72 1.40Western 3.99 1.00 0.18

02--07Eastern 9.77 1.75 2.14Central 9.44 2.28 3.65Western 8.36 1.09 2.30

07--13Eastern 10.10 -1.18 -1.71Central 10.24 -0.43 -0.94Western 12.53 -0.53 1.08

Table 14 shows the social welfare measured by per capita GDP among different

tiers of provinces. As can be seen the gaps between Tier 1 and others are big, but the

differences between Tier 2 and 3 are negligible. This shows the development

imbalance between super provinces/megacities and others. However, in terms of

alienation and polarization, the patterns among three tiers of the provinces are similar.

Table. 14 Social Welfare and Social Tension Due to Alienation/Polarization by Tiers


1995Tier 1 2,529 0.5642 0.3166Tier 2 1,544 0.5043 0.2768Tier 3 1,623 0.5166 0.2710

2002Tier 1 3,974 0.5520 0.2972Tier 2 2,163 0.5375 0.2802Tier 3 2,074 0.5702 0.2865

2007Tier 1 6,429 0.5960 0.3221Tier 2 3,674 0.5853 0.3202Tier 3 3,011 0.6219 0.3292

2013 Tier 1 10,000 0.5758 0.3001

28

Tier 2 6,794 0.5888 0.3359Tier 3 5,977 0.5965 0.3281


Tier 1 6.67 -0.31 -0.90Tier 2 4.93 0.92 0.17Tier 3 3.56 1.42 0.79

02--07Tier 1 10.10 1.55 1.62Tier 2 11.17 1.72 2.70Tier 3 7.74 1.75 2.82

07--13Tier 1 7.64 -0.57 -1.17Tier 2 10.79 0.10 0.80Tier 3 12.11 -0.69 -0.06

5. ConclusionsPeople’s welfare is often measured in terms of the absolute value of indicators

such as the level of income or consumption. However, people often compare

themselves with others (“keeping up with the Jones”). If utility is also measured in or

consists of relative terms, a small gain in absolute income but a decline in relative

position may reduce the person’s welfare, which may increase social tension.

This paper evaluates the social tension using four rounds of the China Household

Income Projects (CHIPs) data. When using the Gini social welfare function, we found

that across the country, the overall level of social welfare increased steadily from

1995 to 2013. However, urban residents have higher income and better social welfare

compared with rural residents. The social tension in people with urban Hukou is

significantly lower than those have rural Hukou and the migrant population.

By region, the social tensions in the Western region are the most severe.

However, after 2007, the social tension in the Western region has been declining at a

higher rate than that of the other two regions. This shows that the differences in

welfare between regions are shrinking. The social welfare of the provinces with the

highest GDP per capita growth is much higher than that of the provinces with

relatively backward development. Tier one provinces shared most of the economic

development results, which implies the divergence of provincial development.

As for social tension caused by poverty, we used the 2010 poverty line of 2,300

yuan. We found that the poverty gap ratio and the severity of poverty in urban areas

are lower than that of rural residents and migrants, and people with urban Hukou are

less likely to fall into poverty. A similar conclusion has been reached using the social

29

tension for relative poverty. The social tension in Eastern China is the lowest while

that in Western China is the highest, but the social tension in the Western region is

declining rapidly, which shows that the social welfare in the Western region is

constantly improving. At the same time, our study also found that the mega-provinces

have a greater chance of enjoying social benefits, and the welfare distribution among

the provinces is very unbalanced.

We estimated social tension due to alienation and polarization, we found that they

do not show significant differences between regions and provinces, but social welfare

level is higher in regions with better economic development.

The uneven distribution of social welfare among different groups of people

separated by Hukou (in terms of both rural-urban dimension and regions dimension)

is a major source of social tension and is a major concern for the society. With the

abolition of the agricultural tax, and the introduction of a basic pension and healthcare

system, together with economic development and the relaxation of rural to urban

Hukou control, the social tensions in rural areas are declining significantly. However,

with China’s geographically uneven growth across regions, the problem with the

Hukou system now is less than the rural-urban divide but more of due to regional

differences. The variation of the social tension index across regions means that

regional unbalance is the great challenge that needs to be addressed.

Due to China’s extraordinary economic growth, the poverty induced social

tension in Chinese society has been declining. However, the inequality in China has

been increasing up to 2012. Given the inequality in China is already one of the highest

in the world, China should focus more on addressing the unequal distribution with

redistributive policies.

Despite the problems, social tension in China is reducing overall. In response to

the issues of income distribution and social tension, the Chinese government is

making serious efforts to increase the incomes of the poor and to expand the middle

class, by balancing efficiency and equality, undertaking redistributive activities, and

providing public services to the poor areas. As a result of these polices we can expect

a continuing improvement in social welfare.

30

References

Boyce, Christopher J., Gordon Brown and Simon Moore, 2010 “Money and Happiness: Rank of Income, Not Income, Affects Life Satisfaction” Psychological Science, 21(4): 471-475.

Esteban, Joan-Maria., & Debraj Ray, 1994. “On the Measurement of Polarization”. Econometrica, 62(4): 819–851.

Foster, James., Joel Greer, Erik Thorbecke, 1984, “A Class of Decomposable Poverty Measures”. Econometrica, 52(3), 761–776

Gustafsson Bjorn, Shi Li, Sicular 2008. Income Inequality and Public Policy in China Inequality and Public Policy in China, New York, NY: Cambridge University Press

Li, Shi. and Terry Sicular, 2014, “The Distribution of Household Income in China: Inequality, Poverty and Policies”, The China Quarterly, 217: 1–41

Li Shi, Hiroshi Sato, Terry Sicular 2013, Rising inequality in China: Challenges to a Harmonious Society. New York, NY: Cambridge University Press

NBS (National Bureau of Statistics of China) (eds), various years. China Statistic Yearbook, China Statistics Press, Beijing.

Jones, Charles I., and Peter Klenow, 2016, “Beyond GDP? Welfare across Countries and Time”, American Economic Review, 106(9): 2426–2457

Kakwani, Nanak., and Hyun Son, 2005, “On Assessing Pro-poorness of Government Programmes: International Comparisons”. Chapter 13. in Kakwani and Silber (eds.) The Many Dimensions of Poverty. London. Palgrave Macmillan.

Kakwani, Nanak., and Hyun Son, 2016, Social Welfare functions and Development: Measurement and Policy Applications. London. Palgrave Macmillan

Kakwani, Nanak., Shi Li, Xiaobing Wang, and Mengbing Zhu, 2018, “Evaluating the Effectiveness of the Rural Minimum Living Standard Guarantee (Dibao) Program in China”, China Economic Review, Forthcoming.

Knight, John. and Ramani Gunatilaka, 2010, “Great Expectations? The Subjective Well-being of Rural–Urban Migrants”, World Development, 38(1):113–124.

Rangazas, Peter., and Xiaobing Wang, 2018, “Internal Migration Restrictions and Labor Allocation in Developing Countries” The Singapore Economic Review, Forthcoming.

Rablen, Matthew D., 2008 “Relativity, Rank and the Utility of Income”, Economic Journal, 118 (528): 801-821.

Sen, Amartya (1999). Development as Freedom. New York: Oxford University Press.

31

Wang, Xiaobing., and Jenifer Piesse, 2013 “The Micro foundations of Dual Economy Models”, The Manchester School. 81(1): 80–101.

Wang, Xiaobing., Jenifer Piesse and Nick Weaver, 2013, “Mind the Gaps: A Political Economy of the Multiple Dimensions of China’s Rural-Urban Divide”. Asian Pacific Economic Literature. 27(2):52-67.

Wang, Xiaobing., and Nick Weaver, 2013, “Surplus Labour and Lewis Turning Points in China”. Journal of Chinese Economic and Business Studies. 11(1): 1-12.

Wang, Xiaobing., Jenifer Piesse, and Zhengmao Ye, 2016 “Labour Markets in China: A Study of Structure and Evolution of Wages”. Frontier of Economics in China. 11(2): 265–301.

World Bank, 2017, “GNI per capita, Atlas method (current US$)”, https://data.worldbank.org/indicator/NY.GNP.PCAP.CD?locations=CN&view=chart

32

https://data.worldbank.org/indicator/NY.GNP.PCAP.CD?locations=CN&view=chart

AppendixTable A1. Provinces in the survey

Province 1995 　 2002 　 2007 　 2013 　urban rural urban rural migrant urban rural migrant urban rural migrant

Beijing √ √ √ √ √ √ √ √ √ √ 　 √ √ √ √Hebei √ 　 √ √ 　 √ 　 √ 　 √ 　　　　　Shanxi √ √ √ √ √ √ √ √ √ √ 　 √ √ √ √Liaoning √ √ √ √ √ √ √ √ √ √ 　 √ √ √ √Jilin √ 　 √ √ 　 √ 　　　　　　　　　Shanghai 　　　　　　　 √ √ 　 √ 　　　　Jiangsu √ √ √ √ √ √ √ √ √ √ √ √ √ √ √Zhejiang √ 　 √ √ 　 √ 　 √ √ √ √ 　　　　Anhui √ √ √ √ √ √ √ √ √ √ √ √ √ √ √Fujian 　　　　　　　 √ √ √ 　　　　　Jiangxi √ 　 √ √ 　 √ 　　　　　　　　　Shandong √ 　 √ √ 　 √ 　　　　　 √ √ √ √Henan √ √ √ √ √ √ √ √ √ √ √ √ √ √ √Hubei √ √ √ √ √ √ √ √ √ √ √ √ √ √ √Hunan √ 　 √ √ 　 √ 　 √ √ √ 　 √ √ √ √Guangdong √ √ √ √ √ √ √ √ √ √ √ √ √ √ √Guangxi 　　　 √ 　 √ 　　　　　　　　　Chongqing 　　　 √ √ √ √ √ √ √ √ √ √ √ √Sichuan √ √ √ √ √ √ √ √ √ √ √ √ √ √ √Guizhou √ 　 √ √ 　 √ 　　　　　　　　　Yunnan √ √ √ √ √ √ √ √ √ √ 　 √ √ √ √Shanxi √ 　 √ √ √ 　　　　　Gansu √ √ √ √ √ √ √ √ √ √ 　 √ √ √ √Xinjiang 　　　 √ 　 √ 　　　　　　　　　Note: Chongqing is included in Sichuan when the survey conducted in 1995

33

Table A2. Social Welfare and Social Tension by Sectors and Regions



income

Social tension

(Gini index)

1995

Eastern-urban 6219 8719 0.2867Eastern-rural 2185 3546 0.3836Eastern-migrant 　　　Central-urban 4288 5713 0.2493Central-rural 1839 2576 0.2863Central-migrantWestern-urban 4933 6645 0.2577Western-rural 1481 2156 0.3132Western-migrant 　　　

2002

Eastern-urban 8636 12739 0.3221Eastern-rural 3221 4985 0.3538Eastern-migrant 6592 9814 0.3283Central-urban 6230 8743 0.2874Central-rural 2304 3263 0.2938Central-migrant 4583 7011 0.3464Western-urban 6698 9697 0.3093Western-rural 1869 2680 0.3025Western-migrant 5396 8477 0.3635

2007

Eastern-urban 14803 22591 0.3447Eastern-rural 4431 7007 0.3676Eastern-migrant 13786 18899 0.2706Central-urban 11105 15344 0.2762Central-rural 3261 4742 0.3124Central-migrant 8647 13179 0.3439Western-urban 9694 14233 0.3189Western-rural 2599 3866 0.3277Western-migrant 10893 16483 0.3391

2013

Eastern-urban 21023 32701 0.3571Eastern-rural 7921 12895 0.3857Eastern-migrant 12628 20284 0.3775Central-urban 15937 23364 0.3179

34

Central-rural 5510 8745 0.3700Central-migrant 12348 18938 0.3480Western-urban 16508 23782 0.3059Western-rural 4861 7952 0.3887Western-migrant 14385 20493 0.2981

growth rate 　　　

95--02

Eastern-urban 4.80 5.57 1.68Eastern-rural 5.70 4.99 -1.15Eastern-migrant 　　　Central-urban 5.48 6.27 2.05Central-rural 3.28 3.43 0.37Central-migrantWestern-urban 4.47 5.55 2.64Western-rural 3.38 3.16 -0.49Western-migrant 　　　

02--07

Eastern-urban 11.38 12.14 1.37Eastern-rural 6.59 7.05 0.77Eastern-migrant 15.90 14.00 -3.79Central-urban 12.26 11.91 -0.79Central-rural 7.19 7.77 1.24Central-migrant 13.54 13.45 -0.14Western-urban 7.68 7.98 0.61Western-rural 6.82 7.60 1.61Western-migrant 15.08 14.22 -1.38

07--13

Eastern-urban 6.02 6.36 0.59Eastern-rural 10.17 10.70 0.80Eastern-migrant -1.45 1.19 5.71Central-urban 6.21 7.26 2.37Central-rural 9.14 10.74 2.86Central-migrant 6.12 6.23 0.20Western-urban 9.28 8.93 -0.69Western-rural 11.00 12.77 2.89Western-migrant 4.74 3.70 -2.13

35

Table A3. FGT Class of Poverty Measures by Sectors and Regions

36

Year 　 Headcount

ratioPoverty gap

ratioSeverity of

poverty

1995

Eastern-urban 2.79 0.62 0.31Eastern-rural 49.54 18.13 10.25Eastern-migrant -　 -　 -　Central-urban 9.05 2.12 0.85Central-rural 63.68 22.47 11.28Central-migrant - - -Western-urban 4.75 1.11 0.41Western-rural 77.00 32.41 17.00Western-migrant -　 -　 -　

2002

Eastern-urban 1.20 0.23 0.07Eastern-rural 24.82 8.24 3.99Eastern-migrant 3.73 1.66 1.08Central-urban 3.14 0.73 0.26Central-rural 47.50 14.58 6.38Central-migrant 9.36 3.24 1.85Western-urban 3.59 0.80 0.34Western-rural 60.85 22.20 10.81Western-migrant 6.44 1.99 1.15

2007

Eastern-urban 0.34 0.08 0.03Eastern-rural 13.65 5.33 8.46Eastern-migrant 0.34 0.18 0.16Central-urban 0.65 0.17 0.08Central-rural 22.69 6.84 3.15Central-migrant 0.36 0.07 0.01Western-urban 0.71 0.18 0.08Western-rural 38.25 12.70 6.08Western-migrant 0.35 0.07 0.01

2013

Eastern-urban 0.74 1.58 7.89Eastern-rural 4.91 2.93 14.44Eastern-migrant 1.48 1.55 1.65Central-urban 0.69 1.19 6.01Central-rural 9.07 3.96 4.67Central-migrant 1.03 2.78 11.41Western- 0.69 1.00 4.81

37

urbanWestern-rural 12.31 5.34 18.28Western-migrant 2.15 0.34 0.10

growth rate 　 Headco

unt ratio

Poverty gap ratio

Severity of poverty

95--02

Eastern-urban -11.38 -13.31 -19.55Eastern-rural -9.40 -10.65 -12.63Eastern-migrant -　 -　 -　Central-urban -14.02 -14.17 -15.37Central-rural -4.10 -5.99 -7.82Central-migrant -　 -　 -　Western-urban -3.93 -4.64 -2.64Western-rural -3.31 -5.26 -6.26Western-migrant -　 -　 -　

02--07

Eastern-urban -22.37 -18.12 -13.85Eastern-rural -11.27 -8.35 16.24Eastern-migrant -38.11 -35.89 -31.34Central-urban -27.05 -24.83 -20.39Central-rural -13.74 -14.04 -13.14Central-migrant -48.00 -54.19 -63.37Western-urban -27.73 -25.95 -24.92Western-rural -8.87 -10.58 -10.87Western-migrant -44.04 -48.51 -58.22

07--13

Eastern-urban 14.08 62.93 150.07Eastern-rural -15.66 -9.48 9.32Eastern-migrant 27.91 43.31 46.75Central-urban 1.09 37.56 103.68Central-rural -14.17 -8.71 6.76Central-migrant 19.39 86.89 212.65Western-urban -0.40 33.27 97.12Western-rural -17.22 -13.43 20.14Western-migrant 35.17 29.27 37.39

38

Table A4. Social Tension Due to Poverty by Secotors and Regions

Year 　 Poverty gap ratio

Severity of poverty

1995

Eastern-urban 0.20 0.29Eastern-rural 13.99 17.39Eastern-migrant -　 -　Central-urban 1.02 1.33Central-rural 23.86 28.46Central-migrant -　 -　Western-urban 0.46 0.58Western-rural 41.12 45.91Western-migrant -　 -　

2002

Eastern-urban 0.05 0.06Eastern-rural 4.53 5.46Eastern-migrant 0.46 0.56Central-urban 0.23 0.28Central-rural 12.23 14.59Central-migrant 1.26 1.62Western-urban 0.23 0.31Western-rural 22.67 26.18Western-migrant 0.64 0.88

2007


2013


39

growth rate 　 Poverty gap

ratioSeverity of

poverty

95--02

Eastern-urban -17.88 -20.02Eastern-rural -14.89 -15.25Eastern-migrant -　 -　Central-urban -19.23 -19.73Central-rural -9.11 -9.10Central-migrant -　 -　Western-urban -9.66 -8.37Western-rural -8.16 -7.71Western-migrant -　 -　

02--07

Eastern-urban -26.98 -27.07Eastern-rural -14.38 -5.13Eastern-migrant -43.76 -42.82Central-urban -32.83 -31.90Central-rural -20.24 -19.68Central-migrant -59.62 -61.53Western-urban -31.42 -31.78Western-rural -16.90 -16.24Western-migrant -54.92 -57.67

07--13

Eastern-urban 53.19 58.80Eastern-rural -18.23 -13.26Eastern-migrant 41.63 35.40Central-urban 28.25 33.78Central-rural -17.56 -13.56Central-migrant 75.93 81.88Western-urban 22.34 28.63Western-rural -23.23 -11.57Western-migrant 24.66 31.41

TableA5. Relative Poverty Line (40%×medium income)

Year 　 Headcount ratio

Poverty gap ratio

Severity of poverty

1995total 18.55 5.50 3.53urban 3.88 0.90 0.40rural 7.22 2.41 4.90

2002


5.31 2.04 1.25

2007 total 21.37 7.38 4.34

40

urban 7.70 1.89 0.74rural 12.27 4.15 5.49migrant

4.81 1.21 0.49

2013


9.23 3.63 2.54

Growth rate Headcount ratio

Poverty gap ratio

Severity of poverty

95--02total -1.05 -1.02 -6.23urban 8.03 7.63 5.12rural 2.62 -1.34 -20.90

02--07


-1.98 -9.93 -17.22

07--13

total -5.97 -4.02 3.72urban 4.78 9.93 21.36rural 0.77 3.87 9.71migrant

11.49 20.06 31.77

Table A6. Social tension due to relative povertyYear 　 Poverty gap ratio Severity of poverty

1995total 5.35 7.87urban 0.50 0.68rural 3.45 8.51




Growth rate Poverty gap ratio Severity of poverty

95--02total -6.48 -8.99urban 1.80 0.80rural -5.08 -13.32

02--07 total -3.92 -2.57

41

urban -5.82 -6.10rural 5.95 15.10migrant -20.75 -20.74

07--13total -12.50 -9.97urban 2.39 5.03rural -6.73 -5.58migrant 17.08 18.20

Table A7. Relative Poverty Line（40%×medium income)-measured by regions

Year 　 Headcount

ratioPoverty gap

ratioSeverity of

poverty

1995


2002 Eastern

11.56 3.64 1.74

Central

7.92 1.92 0.73

Western

8.68 2.31 1.02

2007

Eastern

16.15 5.66 4.18

Central

11.44 3.39 1.57

Western

13.19 3.92 1.83

2013

Eastern

14.40 5.66 4.59

Central

14.57 5.54 4.59

Western

16.39 6.34 7.58

Growth rate

　 Headcount

ratio

Poverty gap ratio

Severity of poverty

95--02

Eastern

-0.97 -1.48 -11.03

Central

1.72 -2.13 -16.93

Western

3.95 4.29 2.10

02--07


42

07--13

Eastern -1.89 -0.02 1.57Central 4.11 8.54 19.63Western 3.68 8.36 26.70

Table A8. Social tension due to relative poverty-measured by regions




2007 Eastern 1.541 2.235Central 1.494 1.864Western 2.040 2.560



Eastern -7.28 -11.66Central -7.23 -12.87Western -1.09 -2.29

02--07Eastern -2.97 0.24Central -0.55 -0.66Western 0.77 0.25

07--13Eastern -7.59 -7.73Central -0.94 1.86Western -2.84 2.76

Table A9. Relative Poverty Line（40%×medium income)-measured by Tiers

Year 　 Headcount

ratioPoverty gap

ratioSeverity of

poverty

1995Tier 1 13.13 4.14 3.76Tier 2 9.50 2.87 2.63Tier 3 6.68 1.97 1.82

2002Tier 1 11.68 3.49 1.57Tier 2 10.30 2.89 1.32Tier 3 8.53 2.13 0.85

2007 Tier 1 15.75 5.61 4.03

43

Tier 2 11.65 3.68 1.87Tier 3 12.13 3.59 1.64

2013Tier 1 14.40 5.66 4.59Tier 2 16.64 6.66 5.83Tier 3 14.73 5.64 5.82


unt ratio

Poverty gap ratio

Severity of poverty

95--02Tier 1 -1.65 -2.41 -11.77Tier 2 1.17 0.12 -9.34Tier 3 3.54 1.13 -10.37

02--07Tier 1 6.15 9.96 20.81Tier 2 2.50 4.95 7.10Tier 3 7.30 11.07 14.08

07--13Tier 1 -1.47 0.14 2.19Tier 2 6.12 10.38 20.92Tier 3 3.29 7.80 23.53

Table A10. Social tension due to relative poverty -measured by Tiers


1995Tier 1 3.11 5.29Tier 2 3.34 5.82Tier 3 2.42 4.30

2002Tier 1 1.72 2.10Tier 2 2.31 2.95Tier 3 1.81 2.28

2007Tier 1 1.527 2.167Tier 2 1.621 2.054Tier 3 1.871 2.321

2013Tier 1 0.960 1.380Tier 2 1.695 2.508Tier 3 1.525 2.504

Growth rate 　　　95--02 Tier 1 -8.16 -12.33

Tier 2 -5.10 -9.23Tier 3 -4.08 -8.63

02--07Tier 1 -2.32 0.59Tier 2 -6.86 -7.01Tier 3 0.71 0.32

07--13Tier 1 -7.44 -7.25Tier 2 0.74 3.39Tier 3 -3.35 1.27

44

Table A11. Social Welfare and Social Tension Due to Alienation/Polarizationby Sector and Regions


Alienation

Polarization

1995

Eastern-urban 5279 0.3945 0.2157Eastern-rural 1743 0.5083 0.2493Eastern-migrant . . .Central-urban 3732 0.3467 0.1947Central-rural 1567 0.3916 0.2106Central-migrant . . .Western-urban 4305 0.3521 0.1888Western-rural 1242 0.4240 0.2217Western-migrant . . .

2002

Eastern-urban 7170 0.4372 0.2302Eastern-rural 2625 0.4734 0.2393Eastern-migrant 5404 0.4493 0.2420Central-urban 5239 0.4007 0.2266Central-rural 1941 0.4052 0.2229Central-migrant 3722 0.4691 0.2455Western-urban 5566 0.4260 0.2334Western-rural 1565 0.4160 0.2271Western-migrant 4429 0.4775 0.2281

2007


2013


45


welfareAlienatio

nPolarizatio

n

95--02

Eastern-urban 4.47 1.48 0.94Eastern-rural 6.02 -1.01 -0.59Eastern-migrant 　　　Central-urban 4.97 2.09 2.19Central-rural 3.10 0.49 0.82Central-migrantWestern-urban 3.74 2.76 3.08Western-rural 3.36 -0.27 0.34Western-migrant 　　　

02--07

Eastern-urban 10.89 1.37 1.36Eastern-rural 6.08 0.97 1.56Eastern-migrant 17.41 -4.24 -5.48Central-urban 12.70 -1.10 -1.89Central-rural 7.08 0.90 -0.02Central-migrant 13.43 0.02 0.50Western-urban 7.60 0.46 0.06Western-rural 6.16 1.77 2.17Western-migrant 15.59 -1.38 -1.38

07--13

Eastern-urban 5.95 0.43 -0.01Eastern-rural 9.86 0.74 0.57Eastern-migrant -3.27 5.99 6.81Central-urban 5.48 2.45 2.66Central-rural 8.26 2.69 2.21Central-migrant 6.83 -0.66 -3.24Western-urban 9.43 -0.60 -0.36Western-rural 10.35 2.31 0.72Western-migrant 4.63 -1.19 1.55

46

journal article · web view2018/05/28 · gni per capita (formerly gnp per capita) is the gross...

Documents