Mapping the Four C's of Chinese Wealth

BY WARNER BROWN

MAY 12, 2014 

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SHANGHAI — Conversations about China have long stopped askingif decades of breakneck growth have widened the gap between rich and poor. English-language media is now more likely to focus on whether the country's inequality is merely as deplorable as the United States', or if it has already joined Latin America and sub-Saharan Africa to become one of the globe's most socially stratified places. The map below gives a vivid picture of that (click any image to enlarge):

China's inequality is regional, as it is in many large countries. Terms like "wealthy coastal provinces" and "impoverished interior" are now well-worn sayings in any China hand's phrase book. Most English-language discussions of China's regional inequality stop there, or at most focus on differences between the country's 31 provincial-level regions. The risk of overlooking finer-grained trends looms large, given that many Chinese provinces are larger than entire countries in both size and population.

This forms a stark contrast with the United States, where the accessibility of census data and mapping tools has filled the Internet with detailedcartographical exposés on the nation's haves and have-nots. In China the problem is not lack of interest, but a paucity of publicly available digital data; maps as fine-grained as these U.S. county-level ones are a challenge to compile when some of China's data must be downloaded off online gray markets or entered by hand from pricey official statistics books, and the few Chinese maps that are produced rarely cause ripples beyond the Chinese-language Internet. 

The map above attempts to provide a more detailed look at Chinese income inequality by using the 2012 China Statistical Yearbook for Regional Economy, the most recent book of regional data available from the nation's second-largest public library. The Yearbook provides data for China's 300-plus prefectures: subprovincial administrative units covered by a mix of towns and farmland whose largest cities are designated as prefectural seats. The Yearbook also contains separate per capita income data for each prefecture's urban and rural dwellers, but the map combines them into a weighted average based on urbanization rates. (While the rural and urban income metrics differ slightly, they are the most comparable metrics the government produces, and Chinese analysts frequently compare the two when calculating the urban/rural income gap.)

Analyzing China at the prefectural level both confirms and complicates widely held views of the nation's wealth gap. Parts of the coast are indeed above the national average, but many other pockets of wealth lie scattered around the country. How did so many parts of China's supposedly poor interior manage to achieve above-average incomes? Much of China's geographic income gap can actually be explained with a few patterns. Let's call the following list "the four C's" for ending up on the right side of China's regional inequality.

1. Cities:

This ingredient for wealth is likely obvious to those familiar with China's gaping urban-rural divide. The Statistical Yearbook shows that peasant incomes are only about a third of urbanites'. Since this article calculates a prefecture's per capita income as a weighted average of its rural and urban incomes, the level of urbanization will play a huge role in determining whether the prefecture beats the national average, as more urbanized prefectures are weighted more heavily toward higher urban incomes.

It may seem easy to conclude that massive-scale urbanization (such as that proposed by the central government in March 2014) is the key to addressing China's regional inequality. The map below shows this hope may be misplaced. Even when filtering for only urban incomes, China remains a divided place:

Urbanization will undoubtedly help to improve people's lives, but regional inequality has other causes that must be explored as well.

2. Coast:

The coastal advantage is real. Common in most countries, in export-heavy China this phenomenon has been driven by policies that privileged coastal investment and development in the early days of the country's reforms. The growth of factory towns and bustling trading cities has propelled the rise of incomes up and down China's coastal prefectures. Of 53 prefectures abutting the Pacific Ocean, 37 have above-average incomes, and eight of China's 10 richest prefectures sit on the coast.

Despite this, the maps show the term "rich coastal provinces" to be a bit of a misnomer. Zhejiang province is the only coastal province in which every prefecture boasts incomes above the national average -- all of the others have at least a few underperformers. Take Guangdong, regularly considered one of China's richest and most developed provinces. Its wealth is highly concentrated in the industrial metropolises of the Pearl River Delta -- the area where the Pearl River meets the South China Sea -- which is surrounded by a relatively poor hinterland. Census data reveals that Pearl River Delta cities like Guangzhou, Shenzhen, and Dongguan combined contain just over half of Guangdong's 100 million residents, meaning that the other half live in underdeveloped outer regions. 

3. Capitals:

China's capitals are almost invariably their province's or region's largest cities by population and economic size. Home to government bureaus and the regional headquarters of state enterprises, they also enjoy well-trained workforces and good infrastructure that make them the first stop for inbound investment. The virtuous cycle of investment and development helps ensure the capitals grow large populations of high-earning urbanites, often making them islands of wealth amid seas of relative poverty.

Even capitals that fail to surpass the national average still maintain an edge over the poor provinces they administer. Every capital is significantly richer than its province's or region's average, ranging from a premium of 11 percent for Fuzhou, capital of Fujian, to Xi'an, whose residents' incomes are nearly double the average of the province of Shaanxi.

4. Coal:

Coal in this case refers not just to coal, but to natural resources more broadly. But coal does explain the most famous example: The city of Ordos, occupying an otherwise desolate patch near the Gobi Desert, hasgrown rich and urban because it sits on over 10 percent of China's coal reserves. Resources also explain several of the other rich prefectures in otherwise poor areas, such as Karamay in Xinjiang, Baotou in Inner Mongolia, Daqing in Heilongjiang, Golmud in Qinghai, and Panzhihua in Sichuan.

Of course, natural resource abundance alone is not a guarantor of high incomes -- just see coal-rich Shanxi -- but in otherwise poor, sparsely populated areas, it can foster the development of urban mining and service economies that boost the overall economy and raise individual wealth as well. 

Studying China's income gap at the prefectural level is valuable, if for no other reason than it gives a slightly closer glimpse at the contours of Chinese inequality. There may be no guaranteed way to get rich here -- but this data at least shows where the odds are best.