Dividing China into seven regions reveals rural income and consumption divergence for both 1980–
2005 and 2000–05. But while real rural consumption growth averaged 7.7 percent over 1985–2005 in the
eastern coastal region, it averaged 6.5 percent uniformly in the interior. In evaluating well-being, such
rapid improvement in all regions arguably overshadows negative connotations of divergence. Twenty
years of household survey data reveal dramatic increases in rural household savings, as rural consumption
improved more slowly than income in some periods. This raises questions about the suitability of
consumption as a basis for measuring well-being and its distribution. Increased savings appear to be
transient, as some households save while others dissave to purchase durables and afford lumpy services
like education and healthcare—supplies of which became more plentiful in the 1990s. The paper argues
that more meaningful measures of regional disparities come from differences in regional poverty
headcounts. It also suggests that higher regional inequality and accompanying interregional migration
indicate that inequality plays an important positive role in inducing economic actors voluntarily to
move to more productive locations and activities as a mechanism for ensuring sustainable improvements
in individual well-being.