CHINA: IS REGIONAL INEQUALITY INCREASING

IS THERE INCREASING REGIONAL INEQUALITY IN CHINA?

A growing literature uses sub-national data from China to measure trends in regional inequality and to test models of economic growth and convergence.

John Gibson and Chao Li (Voxeu)

Global Economic Intersection, August 13, 2012

Most published studies use provincial-level data although finer spatial scales, such as prefectures (Roberts et al. 2012) and counties (Banerjee et al. 2012), are starting to be used. But regardless of scale, most authors ignore that China’s local GDP per capita data cannot be interpreted in the way that economists would expect, of measuring value-added or output per resident. Instead, for most of the reform era in China, what has been reported is the GDP per registered population.

Unlike in most countries, China’s local populations can be counted in two ways; by how many people have hukou household registration from each place and by how many people actually reside in each place. The counts differ by the non-hukou migrants – people that move from their place of registration – who have grown from fewer than five million when reform began in 1978 to over 200 million by 2010. For most of the first three decades of the reform era, the hukou count was used to produce per capita GDP figures. In coastal provinces the hukou count is many millions more than the resident count, while for migrant-sending inland provinces it is the reverse, creating a systematic and time-varying error in provincial GDP per capita.

For example, at the time of the 2000 census, Guangdong province had a registered population of 75 million but residents numbered 86 million, so the hukou count overstates GDP per capita by 15%. At finer spatial scales, such as for individual counties and cities, the error is much larger. The city of Shenzhen provides an extreme example; its registered population was just over one million by the time of the 2000 census but its residents numbered seven million, so per capita GDP was overstated by almost 600% in the official data of the time (Chan 2009).

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