A major challenge during China"s transition to a market economy is to extend the benefits of growth to all of society, and to protect the poor and the vulnerable. This report presents findings on the levels and trends in income inequality in China since the early 1980s, analyzing the interaction between growth, poverty and inequality during this period. It takes into account the expanding rural and urban areas, and examines disparities in pay across educational, occupational and gender groupings. The study also evaluates the impact of land distribution on incomes and welfare, and discusses policies that would improve the welfare of different population segments.