The　study　aims　to　investigate　both　income-related　health　inequality　and　horizontal　equity　in　urban　and　rural　China.　The　4th　and　5th　National　Health　Services　Survey,　and　extended　samples　in　Shaanxi　Province　surveyed　in　2008　and　2013,　were　analysed.　Health　outcome　was　measured　using　the　EQ-5D-3L　utility,　scored　by　the　Chinese-specific　tariff.　The　concentration　index　was　calculated　to　measure　the　degree　of　income-related　health　inequality　and　was　further　decomposed　to　study　the　strength　of　different　contributing　factors　to　explain　health　inequality.　The　horizontal　inequity　was　further　measured　based　on　the　decomposition　results.　The　final　study　sample　consists　of　15,505　respondents　in　2008　and　48,808　respondents　in　2013.　Descriptive　analysis　shows　that　compared　to　2008,　respondents　in　both　urban　and　rural　China　reported　worse　HRQoL　in　2013.　There　was　a　pro-rich　inequality　of　HRQoL　in　both　urban　and　rural　China.　Controlling　for　demographic　factors,　the　pro-rich　inequity　of　HRQoL　remains.　Economic　and　educational　statuses　are　found　to　be　two　key　factors　explaining　the　pro-rich　inequity.　The　establishment　of　basic　medical　insurance　has　shown　a　mixed　effect　on　reducing　health　inequality.　Strategies　to　reduce　the　inequality　of　residents＇　economic　and　educational　status,　through　further　implementing　the　poverty　reduction　policies,　should　be　prioritised　by　the　local　government.