The Research For The Factors Affecting Income Inequality In China And Solutions

After30years of opening the market, China has shocked the whole world by high speedgrowing in it’s economy. With increased income, the living conditions of residents had improvedsignificantly. But, there are still many problems. For example, the inequality of the incomebetween the rich region and the poor region is getting high. Among that there are three kinds ofinequality which are the inequality between urban and rural, the regional inequality, and theinequality between different industries. The regional inequality is a key factor which wouldblocked the economy form balanced and sustainable developing. Therefore, the paper used Theilindex to measure the situations of regional inequality from1995to2012. The total inequalityinclude the inequality between regions and regional inequality. We found that the relativeinequality of income is generally stable, regional inequality decreased year by year, but theinequality between regions was increasing year by year, reflecting that the three regions had clubconvergence, but the inequality between clubs was expanding. Especially in recent years, therelative inequality between the regions showed an obviously trend of expanding. The problem ofinequality should be emphasized. After the classification and research, the paper indicated thecurrent situation of the regional inequality, and then focused on panel data to analysis the reasonsof the regional inequality among three regions and presented advices to lower the inequality.