Master's Thesis from the year 2014 in the subject Economics - Case Scenarios, grade: A+, , language: English, abstract: This paper illustrates the main sources of income inequality in China and analyzes social policies and mechanisms that led to decreasing income inequality and pro-poor growth in Brazil in order to present lessons learnt for China to reduce income inequality. It explores how labor markets and social policies play a crucial role in directly or indirectly affecting inequality, suggesting a convergence of labor incomes through educational expansion and a constant rise of minimum wages, as well as effective non-contributory social assistance has contributed the most to the decline of income inequality in Brazil. These factors are evaluated not only from a monetary perspective but also from the perspective of people's subjective wellbeing of enhanced capabilities and opportunities and its impact on social and economic development. This paper argues that Brazil's experience offers solid policy recommendations for China to tackle rising income inequality and proposes interesting debates for social policy in China and other developing countries.