Policy Responses to Domestic Challenges

Inequality

Inequality

Measures Gini coefficient

1980 .33 1995 .45 2002 .45

Urban-rural disparity is a big factor As wage-earning has increased for rural

residents (including migrant laborers), intra-rural inequality has declined.

Hu Jintao/Wen Jiabao leadership

Building a “harmonious society” Attempt to address inequality

Inequality

Health care* Education Social Security

under-funded by state

Inequality in access to health care

Health care in rural China As of 2000, roughly 80% of people in rural China were without

health insurance of any kind new Rural Cooperative Medical Scheme (2003)

Implemented in 86% of counties by 2007 Subsidies per enrollee:

40 RMB from the central government and 40 RMB from local governments Reimbursement

Formula for inpatient service Medical savings account for outpatient services and preventive care

Illness major cause of impoverishment lack of health insurance raised the number of rural households living

below the poverty line by an estimated 44% low-income families had to cover high-out-of-pocket medical costs

themselves Access

“we do not find that the NCMS decreases out-of-pocket expenditure nor do we find that it increases utilization of formal medical service or improves health status, as measured by self-reported health status and by sickness or injury in the past four weeks. Our study indicates that despite the wide expansion of coverage, the impact of the NCMS is still limited.”

Fiscal system “broken” (C. Wong)

Expenditures very decentralized Center allocates 30% of budget Localities allocate 70%

Local governments tasked with funding Health Education Society security

Welfare, old-age pensions, unemployment

Hu Jintao/Wen Jiabao leadership

Slowly shifting emphasis in inter-governmental fiscal transfers

Central-local regular intergovernmental fiscal transfers (equalizing)

2005年中央对地方一般性转移支付地区分布图

537.448%

51.35%

531.547%

东部地区 中部地区 西部地区

Intergovernmental fiscal transfers to support rural tax/fee reform (equalizing)

80

245305

523

661

0100200300400500600700

2001年 2002年 2003年 2004年 2005年

农村税费改革转移支付

Earmarked intergovernmental fiscal transfers (often disequalizing)

360 375 489 516889

13601648

2237 2435 2425

3423 3517

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

1994-2004年中央对地方专项转移支付（单位：亿元）

Attitudes toward inequality

Attitudes toward inequality