A United Nations Development Program report on China released Friday, entitled "China's Human Development Report 2005," says this difference is due to disparities in rural and urban health care.

"Only 15 percent of rural residents had medical insurance in 2004 whereas half the urban population benefited from full insurance," said the fourth human development report to come out of China, and the first to be written by a team of Chinese experts as opposed to foreign institutions and academics.

The 192-page report highlights stark equity gaps that could threaten stability in the world's largest nation.

The Chinese government has started taking steps to address rural-urban inequalities, the report said. This year, over 150 million farmers were part of a pilot project in rural areas which aims to guarantee basic medical insurance to all. This new cooperative is funded with financial aid from central and local budgets and voluntary funds raised by farmers themselves.

Over 70 million people have benefited from new health policies, the report said.

But much work remains to be done. In villages, newborns are still twice as likely to die as those in cities. The same can be said for mothers. Urban maternal mortality is about 33 per 100,000 births, while in the countryside it's roughly 62 per 100,000 births.

"There is no question that more can be done to mend the gap that so often triggers social unrest when economic growth on a national scale leaves the poor and disadvantaged behind," said Khalid Malik, UNDP resident representative and U.N. resident coordinator.

In the last 25 years, China has managed to lift 250 million people out of poverty, the report said.

However, during the same period income inequality doubled. Today, a person living in a city earns on average $1,000 a year, compared with just over $300 in the countryside. An urban citizen can expect to live 5 years longer than a farmer. In Tibet, about half the population can read and write while over 97 percent Chinese living in Beijing, Shanghai or Tianjin are literate.

"Inequality is evident and concrete action should be taken immediately to help those at the bottom of the economic and social ladder," said Li Shi, lead author of the report.

Education is another area which highlights urban-rural inequalities. City-dwellers receive much better education than those in the countryside. "In 2000, just 2.5 percent of China's urban population between 15 and 64 years of age had received no education whatsoever; in rural areas the proportion was 8.7 percent."

Rural dwellers are at a major disadvantage in China. Nationally, the illiteracy rate of women is more than double that of men. To improve literacy rates, the government is promoting compulsory education for the rural poor through renovation of primary and middle schools and providing free textbooks for 24 million students from poor families, the report said.

"The Chinese Government has realized the grave consequences of social inequality, and has started to tackle the problem head-on," said Malik. "This report is particularly timely as the government is shaping its new economic blueprint to ease the strains of inequality."

The report recommends an inclusive social security and pension insurance system to guarantee security for every worker in the country.

"This will require a reform of the household registration system to ensure equal rights to workers migrating to the cities," said the report.

The hukou system of household registration has for years discriminated against the nation's 800 million rural inhabitants. The system originated in 1953, four years after the Communists took power.

The strict registration system classified people as either rural or urban residents. Only registered city dwellers were allowed to live in urban areas, it said.

Jiang Wenran, acting director of the China Institute at the University of Alberta described the hukou system as one of the most strictly enforced "apartheid" social structures in modern world history.

"Urban dwellers enjoy a range of social, economic and cultural benefits while peasants, the majority of the Chinese population, are treated as second-class citizens," he told the BBC News website.

Recently, China proposed abolishing the system in 11 of China's 23 provinces.

The UNDP report also emphasized the need for household services among elderly people. By 2030, the country's aging population will reach 1.6 billion.

Zhao Baohua, deputy director of the Office of China National Committee on Ageing, warned of the consequences of China's graying population. "Aging problems will become a big obstacle to the pace of China's economic development," he told the state-run China Daily newspaper.

The U.N. report advocates promoting entrepreneurship in China by making it easy for small businesses to obtain loans. The authors of the report hope such measures will decrease the gap between the rich and the poor in the country.

Now, most of the wealth in China is held in the fists of a few rich men. While 30 million rural residents continue to live in poverty, Forbes Asia magazine recently revealed that there are now 10 billionaires in U.S. dollars in China, compared with three a year ago.

The report urges China to make primary education a top priority.

"Less than 1.5 percent of Tibetan children go to junior high while more than 60 percent of children in Beijing, Shanghai or Tianjin pursue their secondary education. This calls for more investment and legislation in public education to ensure compulsory primary education," said the report.

The Chinese government has no doubt recognized the myriad challenges it faces to ensure social development on a large scale. But the country still has far to go to address years of prejudice and discrimination its history has been marred, the report said.

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