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Roots and Progress of Modern Inequalities by Victoria Cole, July 8, 2015 Adjust font size:

Dr. Sen Gong, of the Development Research Centre of the State Council, wrote a five-section report, "Inequality in China: A Case Study", with Associate Professor Bingqi Li, from Australian National University, and Save the Children UK, helping to address the root causes of inequality in opportunity and outcomes, as China seeks to pave the way for sustainable economic growth and social development.

Root Causes of and Addressing Inequalities (Section 4 cont. and Section 5)

Some inequalities are the result of:

- Unintended consequences of marketization of essential services. The marketization reform in social services changed original public services, such as education and healthcare providers, into private or semi-private institutions that aim to maximize profits, leaving large numbers of people either excluded from the system completely or receiving poor-quality services.

- Existing policies that institutionalize inequality of opportunity in essential services or fail to provide an effective framework for addressing inequalities. The former includes the hukou system, for example, reinforces disparities by imposing high costs of education, healthcare, and housing and restricting employment and social insurance opportunities for migrant households.

The Chinese government has made considerable efforts though to improve inequalities since 2000:

- A series of regional development strategies, including the strategies of developing the West and Central China and the strategy of reinvigorating the North-East provinces, seems to have been effective. From 2006 to 2010, the annual growth rate in these regions was 13.9%, 13.2% and 13.6% respectively.

- Rural poverty reduction projects have significantly narrowed the gap between the poorest counties and others, although within the poorest counties, the income gap between households has been widening. From 2002 to 2009, average household income in poor priority counties increased faster than the national rural average.

- Due to the liberalized hukou system, rural workers can now come to cities to work and settle without fearing legal checks and possible expulsion because of their migrant status. The top decile of migrant workers earned 3.8 times that of the bottom decile in 2010, and the wage gap between migrant workers and local hukou workers fell to 5% in 2010.

- Scaling up public investment in education and healthcare has expanded access to these essential services. In 2006, when the tuition fee was abolished in western rural areas, it was estimated that more than 200,000 students returned to schools. At the turn of the 21st century, China earmarked a record 18 billion yuan to improve rural drinking water supplies. More than 14 million rural families in 27 provinces had gained access to safe drinking water from 2000 to 2004.

- A social safety net has been established, including minimum living standard schemes covering around 70 million people, and special grants to poor households for education, medical care and housing. There were more than 45 million rural beneficiaries and 25 million urban beneficiaries in 2010.

- The elimination of agricultural taxes and introduction of price subsidies for farmers have directly increased the incomes of rural households.