The urban welfare system in China

The urban welfare system in China

Globalisation and opening up of trade is cited to be the single most important factors responsible for growing income inequality in China . In a study conducted by IMF to examine the impact of globalisation on the living standards of the poor and on income inequality in China , it has been found that although income inequality over the past two decades have increased with an increased in globalisation , all region 's in China including the one 's which are less open to the outside world are growing

relatively fast . This indicates that inequality in income is influenced by factors other than globalisation of the economy (Wei , 2002 . Regional disparity in China is shown to be intimately related to the structure of exports and foreign direct investment which results in limited linkages from these growth engines to the inland regions . Consequent upon government economic reform , liberalisation of exports , and preferential treatment to the coastal areas , China experienced unprecedented economic growth . However , disparities in income and economic opportunities between coastal and inland region 's of China was more pronounced after this globalisation . This regional disparity and income inequality is aggravated firstly because export has acted as growth engine for some region only and not for all . Secondly , as exports in the rich coastal regions are mainly in the form of processing trade , backward linkage towards the poorer regions are limited and thirdly , when efficient labour force from the poorer regions migrate to the richer region due to increase demand for labour in the growing export sector , regional income inequality is likely to aggravate (Fu , 2004

Currently , being the fourth largest economy in the world , China 's unprecedented growth , market reform and globalisation while led to increased standard of living for millions , at the same time , more and more people are suffering the consequences of country 's rapid transition to a market based economy (Qiang , 2006 . In China , the gap between rich and poor has become alarmingly wide during the two decades of economic liberalisation . According to UN statistics the poorest 20 of China 's 1 .3 billion citizens account for only 4 .7 of the richest 20 accounts for more than half . This gap has been steadily widening over the last three years (Cody , 2005 . Rapid growth in the export sector has led to growth in the coastal regions but not in the inland regions . Export oriented foreign direct investment in labour intensive industries in coastal regions has induced labour in the inland regions to migrate to capital rich coastal regions which has enabled the coastal regions to sustain their growth . This migration of labour force to has led to increase in income gap between coastal and inland regions Complementary policies are needed to achieve poverty reducing growth (Fu , X , 2004

Chinese researchers estimate that anywhere from 12 million to more than 22 million residents of an urban population of 200 million live in absolute poverty meaning that they can not afford basic food , clothing and shelter...