Policy Responses to Domestic Challenges Inequality

Inequality Measures Gini coefficient 1980 .33 1995 .45 2002 .45 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)

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

Earmarked intergovernmental fiscal transfers (often disequalizing)

Attitudes toward inequality

Attitudes toward inequality