REGIONAL INCOME INEQUALITY AND ECONOMIC-GROWTH IN CHINA

Using an augmented Solow growth model with cross section and panel dat a, we find evidence of conditional convergence of per capita productio n across China's provinces from 1978 to 1993. Convergence is condition al on physical investment share, employment growth, human-capital inve stment, foreign direct investment and coastal location. We project tha t, in the near term, overall regional inequality as measured by the co efficient of variation is likely to decline modestly but that the coas t/noncoast income differential is likely to increase somewhat. We eval uate alternative policies to reduce the coast-noncoast income differen tial and conclude focusing solely on investment by rural collectives i s insufficient. (C) 1996 Academic Press, Inc.