The Gini coefficient is usually seen as the most important index to evaluate income disparity. It
is also a key criterion for the government to make relevant decisions on income distribution. However,
there are many arguments over the estimations of the Chinese Gini coefficient. On the basis of critical
analysis of relevant literature and adopting a new approach, the authors present a series of Chinese Gini
ratios from 1978 to 2003 and decompose them. To the authors’ best knowledge, such a long period series
of decomposed Chinese Gini coefficients cannot be found in current literature. In line with calculation, the
authors argue that the contribution of the intra-rural Gini ratio to the national Gini coefficient has declined
since 1983, while the intra-urban Gini ratio plays a more and more important role in the whole-country’s
income inequality. However, the current dominant factor in the Chinese Gini coefficient is the Gini
coefficient between rural and urban areas, which shares a similar changing tendency with the nation-wide
Gini coefficient. Thus, studies on Chinese income disparity should pay more attention to probing urban and
rural income inequality. Accordingly, the improvement of Chinese income disparity should focus on
narrowing the rural and urban income gap