1. Policy Responses to Domestic Challenges
Inequality

2. 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.

3. Hu Jintao/Wen Jiabao leadership
Building a “harmonious society”
Attempt to address inequality

4. Inequality Health care* Education Social Security
 under-funded by state

5. 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.”

6. 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

7. Hu Jintao/Wen Jiabao leadership
Slowly shifting emphasis in inter-governmental fiscal transfers

8. Central-local regular intergovernmental fiscal transfers (equalizing)

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

10. Earmarked intergovernmental fiscal transfers (often disequalizing)

11. Attitudes toward inequality

12. Attitudes toward inequality