GEOGRAPHICAL RESEARCH ›› 2019, Vol. 38 ›› Issue (6): 1451-1463.doi: 10.11821/dlyj020180192

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Measurement and spatial disparities of regional Purchasing Power Parity in China

Mei YAN1(), Guoping LI2, Jinchuan HUANG3,4()   

  1. 1. Institute of Industrial Economics, Chinese Academy of Social Sciences, Beijing 100836, China
    2. School of Government, Peking University, Beijing 100871, China
    3. Key Laboratory of Regional Sustainable Development Modeling, Institute of Geographic Sciences and Natural Resources Research, CAS, Beijing 100101, China
    4. College of Resources and Environment, University of Chinese Academy of Sciences, Beijing 100049, China
  • Received:2018-02-24 Revised:2018-06-02 Online:2019-06-20 Published:2019-06-12

Abstract:

As socialism with Chinese characteristics enters into a new era, the security and improvement of people's livelihood have become the focal point of social development, which makes the research on residents' living standard a heated topic in the field of the regional disparities. It is widely acknowledged that the income and commodity price are the two important factors that affect the residents' living standard. Usually, the nominal indices are adopted to study the regional disparities. In that case, the residents' living standard might be overestimated or underestimated due to the difference of price levels in different regions. Regional price index (or regional PPP) is consequently used as a spatial index that represents the comprehensive price level from a basket of the same products or services of different regions, which can be used to compare different price levels among different regions. It can eliminate the impacts of the price disparity and enable the nominal income to reflect the real living standard just as the real income does. This study constructs a framework to measure the different regional price levels in China, which includes a basket of products and a set of calculation methods. Derived from the theory of Purchasing Power Parity, the methods have been applied to estimate the price level among 100 typical cities.

The major results include: (1) Regional PPP is an index that compares the comprehensive prices of different regions, showing that the city with a high regional PPP would have relatively high price of commodities and low purchasing power. (2) The regional PPP of the whole 100 cities differs strongly from each other and ranges from 0.85 to 1.66, with the highest regional price level 1.95 times of the lowest. Specifically, the regional house price differs the most, followed by education and medical treatment. These are also the most critical factors affecting the civil livelihood. (3) The spatial distribution of regional PPP presents spatial agglomeration characteristics. The prices of food, water-electricity-fuel, and transportation are much more aggregated. Moreover, the cities with higher price level aggregate in the southeast coastal area, while cities with lower price level aggregate over the Yellow River basin in the central region.

This study gives an overview of the regional PPP over China, which might be useful for narrowing the gap of real income between different regions and achieving a relatively balanced society. Only by promoting the reasonability of the price level, improving the real purchase power of residents, and lowering the real income gap between regions, can we achieve a balanced livelihood and coordinated development.

Key words: regional price index (regional PPP), Purchasing Power Parity (PPP), price level, regional disparity, China