Inequality and Growth in Modern China/Understanding Poverty and Inequality in China: Methods and Applications

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Inequality and Growth in Modern China, edited by Guanghua Wan. Foreword by Anthony Shorrocks. Oxford: Oxford University Press, 2008. xxiv + 211 pp. £50.00 (hardcover).

Understanding Poverty and Inequality in China: Methods and Applications, edited by Guanghua Wan. Houndmills: Palgrave Macmillan, 2008. xxiv + 293 pp. £60.00 (hardcover).

These two books emerged from a project on inequality and poverty in China launched in 2004 by the World Institute for Development Economics Research (WIDER) of the United Nations University. Director of the project and editor of both is Guanghua Wan, until recently a Senior Research Fellow at WIDER. The papers were selected from some 40 chosen for two international conferences held in 2005. They are a definite contribution to our understanding of the "povertygrowth-inequality [PGI] nexus" in China.

The two titles, one of which includes inequality and growth, the other inequality and poverty, do not reflect a strong difference between the books. Both include discussions of poverty, and both delve into aspects of the PGI nexus. Neither does the Palgrave book's subtitle, Methods and Applications, distinguish it from its sister volume. Wan himself is author or coauthor of eight of the 18 chapters in the two books; other contributors are distinguished economists, including Robert Gregory, Björn Gustafsson, Li Hongbin, Li Shi, Justin Lin, Xin Meng, Lu Ming, Terry Sicular, Tsui Kai-yuen and Wang Xiaolu.

Space constraints do not permit detailed consideration of all 18 papers in the two collections, so I will single out a few for comment. Inequality and Growth begins with an investigation of the links between growth and inequality by Wan, Lu and Zhao Chen. It generates a dramatic conclusion: "inequality is harmful to growth no matter what time horizon ... is considered". This conclusion encourages the search for ways to make growth more equalizing, not only because such growth is pro-poor, but also on the instrumental ground that pro-poor growth generates positive feedback, that is, is pro-growth.

In the second chapter, however, Wang Xiaolu argues that inequality is correlated with growth in China and therefore can be expected to increase as growth continues. One needs to be careful in interpreting such a correlation. There is by now much international experience with the great variation in the growthinequality relation, which is quite sensitive to the nature of the growth model. China can change this correlation by changing its policies and, indeed, Wang suggests policies that can reduce the disequalizing nature of growth.

The third chapter, by Yin Zhang and Wan, tries to disentangle the effects of growth and distribution on poverty reduction in the 1990s and the fourth, by Justin Lin and Liu Peilin, makes the case that a flawed, "CAD" (comparative advantage defying) strategy, which continues to operate in the poorer western and central provinces, has been responsible for the increasing regional disparities in China.

Chapter 7 provides an interesting but rather discouraging spatial analysis of regional inequality by Patricio Aroca, Dong Guo and Geoffrey J. D. Hewings, which builds from insights of the "new economic geography". It finds an increase in spatial dependence in recent years and a consequent move "from convergence to stratification ... to polarization". In Chapter 9, Ming -Dong Paul Lee examines changing patterns of educational attainment. Despite rapid expansion of education benefiting younger students throughout China and a "virtual elimination of gender bias against girls in educational attainment", inter-provincial inequalities in such attainment remain very large, and increase as students move into higher grades. The reasons appear to be complex, and Lee makes a case for finding ways to overcome them and bring about greater equality of educational opportunity.

In the first chapter of Understanding Inequality and Poverty, Wan, Lu and Chen examine the impact of globalization on regional inequality. …