ABSTRACT
Three decades of virtually uninterrupted hyper economic growth have propelled the People’s Republic of China (PRC) into the ranks of middle-income countries; however, this rapid economic growth has been accompanied by an equally rapid increase in levels of inequality. The official Gini coefficient reached 0.47 in 2012 (Xinhua News 2013), which is greater than the international alert line of 0.4 set by the United Nations (UN-HABITAT 2008). In response to the great concerns about inequality, the government has been paying close attention to redistributive goals through a wide variety of instruments. Public transfers targeting vulnerable groups to promote equality and improve the welfare of the population serve as one of these instruments. In the past decade, the government has made great strides in instituting and improving public sector programs to provide public education, health care, and pensions for its citizens. For example, in 2005, textbook and miscellaneous fees were waived for one-third of students enrolled in compulsory education in western and central rural areas of the country, reaching all students in primary and junior high school by 2008. In addition to broader coverage, it is essential to know whether disadvantaged groups such as rural dwellers, females, or the poor benefit more from public transfers in order to justify them as a rationale for public spending.
