Difference in income between rich and poor has decreased last year, according to a National Bureau of Statistics (NBS) report on Tuesday.
The NBS reported that the Gini coefficient registered at 0.468 in 2014, down from 0.473 in 2013.
The Gini coefficient is an indicator of the country's wealth gap, where 0 percent represents the perfect quality and 1 is the perfect inequality.
The index, which dropped for the sixth consecutive year from the high level of 0.491 in 2008, was read by analysts as a positive signal amid the country's reforms to cap the income of top executives of state-owned enterprises and pension reform that requires government and public institution employees to contribute to their retirement plans, China Daily reported.
Disposable per capita income increased by 8 percent, faster than the increase of the gross domestic product last year.
Residents from urban areas registered a slowdown in disposable income by 6.8 percent, while rural resident income increased by 9.2 percent.
Analysts pointed out that even if the 0.4 Gini coefficient remains above international warning, the steady growth of household incomes and narrowing inequality will likely lead to a growth of the middle class and in consumption and the service sectors.
Zhu Haibin, chief China economist at JPMorgan Chase & Co., stressed:
"The expansion in the service sector was stable, the unemployment rate remained under control, household income (growth) surpassed economic growth, and income inequality started to narrow. These are important features in China's economic rebalancing process."
Beijing officials released a guideline to raise the salaries of public employees and civil servants. The wage hike would reportedly range from 10 to 30 percent.
"The pay hike, in our view, indicates Beijing's goal of improving the quality of life for the average Chinese, after having extracted savings by curbing wasteful spending at government branches and SOEs," said Wendy Liu, a researcher at Nomura Securities Co. Ltd.