The World Bank is calling for China's leaders to do more to narrow the growing gap between rich and poor.
A World Bank report presented in Beijing warned China's leaders that it should deal with growing economic disparity, or it could destabilize the world's most populous nation.
Among the report's main recommendations is a call for China to end longstanding restrictions on migration.
For decades, China's communist government has enforced rules that generally ban farmers from moving to cities. Moving from one city to another still requires a permit that can be difficult for most people to get.
China's economy is booming, with the gross domestic product rising an average of more than nine percent each year for the past two decades.
But that growth has occurred mainly in the urban industrialized areas of the eastern coast, while inland regions and the rural west have been largely stagnant.
Income disparities have widened dramatically. Per-capita income in the eastern city of Shanghai, China's business center, have risen to about $5,000 a year, while annual incomes in some western provinces are $70.
World Bank economist Hana Brixi, who prepared the report, said relaxing migration restrictions is key to maintaining stability.
She says allowing people to leave rural areas will reduce the number of farmers who are confined to working in small, unproductive plots of land. A lower farmer population, she says, will result in higher earnings for those who remain in rural areas.
Ms. Brixi says giving people the freedom to migrate from one city to another could also be beneficial for China. "Such type of migration could greatly alleviate the present unemployment problems in Chinese cities," she said. "There are cities where jobs are readily available, and cities where unemployment is relatively higher. If greater mobility across cities is allowed, there would be some equalization effect."
The World Bank says the current economic boom means China's government has a unique opportunity to deal with the economic inequality.
The widening gap between haves and have-nots in China has been one of the main challenges facing President Hu Jintao since he took office in March. His government has pledged to work to improve conditions for those who are being left behind by China's economic ascent.
