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Determinants of Urban GDP per Capita in China’s Cities
Income inequality overall and its manifestation in regional disparities in China are currently a topical subject of research as the fast development of the Chinese economy is very unevenly distributed in different provinces and regions. Inequality in China raises awareness and poses some serious questions regarding the country’s further development. This concerns all levels, both nationwide inequality and by localities, whether it be cities and towns, provinces, economic regions or urban-rural disparity. Addressing existing discrepancies is of great significance as China will not be able to raise internal demand, which is a prerequisite for sustainable longterm growth, unless the vast regional disparities and the urban-rural gap are resolved.
Currently, China “enjoys” the outstandingly high level of inequality with the Gini coefficient totaling 0,47 in 2011, significantly higher than the 0,4 level, the World Bank threshold of social stability2. The decile coefficient stands at 25,73 in 2013, which basically means that top‑10% are almost 26 times richer that the bottom‑10% of the population. This constitutes a threat to social and economic stability. To address the issue, factors of income discrepancies need to be determined for the proper policies to be worked out. In this paper, we attempt to provide an insight into the factors of GDP per capita inequality in the cities and towns of China. We apply regression modeling to test our suggestions.
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