OBJECTIVES: Monitoring the equity of government healthcare subsidies (GHSs) is critical for evaluating the performance of health policy decisions. The aims of this study were to: 1) Investigate the distribution of GHSs in China; and 2) Compare the equity of GHSs in different healthcare services between urban and rural residents. METHODS: Benefit incidence analysis was applied to GHS data from 2 rounds of China's National Health Services Survey (2003 and 2008, N=27,239). Concentration index (CI), a common standard equity measure, was used to evaluate the equity of GHSs in outpatient and inpatient healthcare services. A negative CI indicates disproportionate concentration of GHSs among the poor, while a positive CI indicates the GHS is pro-rich. In addition, Kakwani index (KI), the difference of the CI and Gini coefficient, was used to evaluate the progressivity of GHSs. A positive KI denotes the GHS is regressive, while a negative value denotes the GHS is progressive. RESULTS: CIs for inpatient care in urban and rural residents were 0.2036 and 0.4497 respectively in 2003, and those in 2008 were 0.4433 and 0.5375. Likewise, CIs for outpatient care are positive in both regions in 2003 and 2008, indicating that both inpatient and outpatient GHSs were pro-rich in both survey periods irrespective of region. In addition, KIs for inpatient services were -0.3769 (urban) and 0.0576 (rural) in 2003 and those in 2008 were 0.0280 and 0.1868. KIs for outpatient service were ‑0.4278 (urban) and ‑0.1257 (rural) in 2003, those in 2008 were -0.2572 and -0.1501, indicating that equity was improved in GHS in outpatient care in both regions but not in inpatient services.  CONCLUSIONS: We conclude that high income individuals were the main beneficiaries of GHSs in China, however, the equity in outpatient care improved in both regions.