ABSTRACT
Using household survey data, this chapter investigates the poverty and inequality in urban China during the period 1992 to 1998. The incidence of urban poverty has declined from 1992 to 1995 but increased from 1996 to 1998 when major urban reforms were launched. The western region has the highest concentration of urban poverty, and over time, the income gap between that region and the rest of China has been widening. The result suggests that the current strategy of western development should broaden its focus to include the urban poor in the region. A further decomposition analysis shows that rapid economic growth has been the major force behind the reduction of urban poverty, but the poverty reduction impact would have been even greater if the worsening income distributions had been avoided. A broader development strategy is needed in the future to expand the access of the urban poor to basic education and healthcare.
