This paper constructs and analyses a long-run time-series for regional inequality in China from the Communist Revolution to the present. There have been three peaks of inequality in the last fifty years, coinciding with the Great Famine of the late 1950s, the Cultural Revolution of the late 1960s and 1970s, and finally the period of openness and global integration in the late 1990s. Econometric analysis establishes that regional inequality is explained in the different phases by three key policy variables; the ratio of heavy industry to gross output value, the degree of decentralization, and the degree of openness.

The high and rising household savings rate in China is not easily reconciled with the traditional explanations that emphasize life cycle factors, the precautionary saving motive, financial development, or habit formation. This paper proposes a new competitive saving motive: As the sex ratio rises, Chinese parents with a son raise their savings in a competitive manner in order to improve their son's relative attractiveness for marriage. The pressure on savings spills over to other households. Both cross-regional and household-level evidence supports this hypothesis. This factor can potentially account for about half of the actual increase in the household savings rate during 1990-2007.

This paper develops a unified empirical framework for describing the relative contribution of rural-urban and inland-coastal inequality to overall regional inequality in China during the 1980's and 1990's. The framework assesses rural-urban and inland-coastal inequalities from the same data set, presents results for a sufficiently long time period to transcend short-term fluctuations, allows for differential price changes, and applies a consistent notion of the contribution to inequality using a decomposition analysis. While the contribution of ruralurban inequality is much higher than that of inland-coastal inequality in terms of levels, the trend is very different. The rural-urban contribution has not changed very much over time, but the inland-coastal contribution has increased by several fold. The paper ends by investigating the role of labor migration in this outcome.

Journal articleIFPRI3; GRP3; Theme 9; ISIDSGDP