UN report says social divide threatens growth in China

Beijing: China's growth prospects are clouded by a gulf between rich and poor, deterring consumption and dragging down productivity, said a report released on Sunday.

The UN-sponsored China Human Development Report appeared a day after Chinese President Hu Jintao told a summit in Washington that his nation's continued fast growth was its "important contribution" to steadying the global economy.

But the report warns that skewed policies reinforce social divisions and threaten growth by giving the richest Chinese cities Eur-opean-like levels of development while the poorest rural regions struggle at levels similar to African nations.

The resulting mobility barriers, stagnated skills and dampened consumer spending could stifle growth unless the government channels more resources to poor groups and regions, said the report's authors from the China Institute for Reform and Development and other think-tanks.

"Inequalities that have emerged during rapid growth have widened to levels that pose additional obstacles [to development]," says the report, published in English and Chinese.

"Equalisation of basic public services is an important condition for expanding domestic demand and maintaining steady and rapid economic growth," a chief author of the report, Chi Fulin, told a meeting to mark its release.

Index

Using the UN human development index (HDI) as a key measure, the researchers found that China has made big gains in lifting the incomes, living standards and health of citizens.

From 1990 to 2005, China climbed from 101st to 81st in global HDI rankings. Its performance in healthcare "surpasses developing country averages by wide margins", the researchers found. But the gains have been far from even.

Human development levels in the richest major cities, Beijing and Shanghai, are comparable to poorer Western European economies such as Portugal and Cyprus.

But the "worst-performing Chinese provinces like Guizhou, on the other hand, have HDI levels comparable to Botswana and Namibia," the report said.

Restive and mountain-bound Tibet has the lowest HDI level (0.616) of China's provincial-level administrations, compared with top-performing Shanghai at 0.911.