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The paper analyses growing inequality in the rising powers, concentrating on the situation in China and India. It describes the various processes that are currently underway to reduce inequality in these economies. These processes include a combination of tightening the labour market, as best seen in China, increasing rural productivity and implementing government measures to boost basic rural incomes in all such countries. Reductions in inequality in the emerging economies have a global macro-economic effect of increasing consumption, thus counteracting the current global slowdown. They also have the benefit of creating more space at the bottom for poorer economies to take up more of the world's low-skill production, as the emerging economies themselves move up to higher skill production and exports. This sequential upgrading is being driven by the growth of emerging economy markets and by wage increases in these economies. [ABSTRACT FROM PUBLISHER]