Mainland Income Inequality Must Be Addressed: Governor

China News Digest, 30 January 2002

[CND, 01/30/02] The governor of China's richest province, Guangdong, has become increasingly alarmed about growing regional disparities in economic growth, and the growing gap between income levels in urban and rural areas, the South China Morning Post reported Tuesday.

In the work report he delivered Monday to the opening session of the Guangdong People's Congress, Governor LU Ruihua listed uneven development and low rural incomes as among the major problems that Guangdong now faces.

In contrast, Mr Lu barely mentioned either the Pearl River Delta—the province's richest region by a large margin—or the province's relationship with neighboring Hong Kong in his work report. Mr Lu also did not raise the issue of a possible free-trade area to be established between the mainland and Hong Kong, a subject recently raised by central Government and Hong Kong officials in Beijing.

In his 27-page address, Mr Lu allotted three short sentences to co-operation between Guangdong and Hong Kong, saying only that Guangdong, Hong Kong and Macau should continue to improve inter-governmental communication and co-ordination mechanisms.

Mr Lu mentioned that in 2001, Guangdong's agricultural output grew only 2.7 per cent to 101 billion yuan (HK$94.95 billion). During the same period the province's industrial output increased by more than 11 per cent, to 472 billion yuan.

A similar gap was evident between rural and urban incomes, Mr Lu noted. Last year the average income of Guangdong's rural residents increased 3.5 per cent, to 3,770 yuan. In contrast, the average disposable income of city dwellers grew 7.3 per cent, to 10,415 yuan.

In an attempt to correct the imbalance, in 2001 the Guangdong provincial government budgeted 300 million yuan to pay the school fees of the children of poor families (defined as those whose annual income is less than 1,500 yuan). In his speech, Mr Lu pledged the school-fee subsidy would continue in 2002. He noted that due to this program, children from more than 600,000 rural households no longer had to pay school fees out of limited family funds.

Mr Lu said that Guangdong's finance department also paid 4.3 billion yuan in one-time measures designed to assist underdeveloped areas in the province.

He also underscored that the province faces slowing export growth.

Although Guangdong's primarily Hong Kong-funded export sector continues to be a valuable source of jobs for underemployed rural labourers who head to the province's cities, in 2001 the province's exports increased just 3.8 per cent to US$94.5 billion (HK$737 billion).

Among the province's economic targets this year are gross domestic product growth of nine per cent, an 11 per cent increase in retail sales and fixed-asset investment growth of eight per cent.

[Guangdong must] completely raise its international competitiveness and seize the historic opportunity stemming from China's accession to the World Trade Organisation, Mr Lu said. (Laurel Mittenthal)