China income gap widens as economy slows

Agriculture Ministry statistics show the gap between average urban and rural incomes expanded to 11,100 yuan (about US$1,600) in 2008, with the ratio between the richer city residents to those in the countryside rising to 3.36 to 1, the state-run newspaper China Business News reported Friday.

The ratio was 3.33 to 1 in 2007, with the gap then at 9,646 yuan (about US$1,400).

While the statistical difference seems small, the trend suggests the economic slowdown is foiling efforts by China's communist leaders to close the long-standing, sensitive wealth gap between the cities that have prospered since economic reforms began 30 years ago, and the villages that have lagged behind.

Deteriorating purchasing power in the rural areas could also hinder efforts to boost domestic consumer spending to help compensate for declining exports — a crucial part of the government's anti-recession strategy.

Income inequalities are not uncommon in developing countries, and the increasing gap between the rural and urban incomes reflects to a certain extent the original wide disparities between farms and the cities.

But China's top leaders have made boosting farmers' incomes a top political priority, at the same time ordering an end to exhorbitant school costs and other burdens for the poor.

Members of a top-level government advisory group are proposing that the government raise its basic purchasing price for rice, on which many farmers rely, to help close the gap, the China Business News report said.

Citydwellers earned an average annual income of 15,800 yuan (US$2,300) a year in 2008, Chen Xiwen, a top rural planning official, reported at a recent conference in Beijing. The average rural income was 4,700 yuan (about US$690).

Incomes in Shanghai and some other big cities are about a third higher than the national average.

With a population of 1.3 billion, China has far more people than jobs to be filled. But the country's stunning economic boom enabled many millions of farmers and their children to find work in factories and construction sites, as peddlers of noodles, computer parts and clothing, and as vegetable and livestock farmers in city suburbs.

Plunging global demand for Chinese exports has forced thousands of Chinese factories to close and freshly unemployed migrants to stream from coastal manufacturing regions back to their rural hometowns.

While millions usually return to their villages at this time of the year for the Lunar New Year, the country's biggest holiday, a large share will have no jobs to return to once the Jan. 25-31 festival finishes.

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