Abstract
Income inequalities between urban and rural areas remain high in China, but the gap has begun to narrow. Peasant incomes have increased dramatically since the post‐Mao reforms. Rural areas have new power, but this is a consequence not a cause of the reforms. The improvement in rural conditions reflects a change in the central state's development strategy and ideology, and the local response to incentives embedded in China's reforms. The impetus for these changes is self‐preservation of the state and the Chinese Communist Party. The failure to close decisively the income disparities between the urban and rural areas similarly stems from concerns of regime stability and preservation of the party‐state.
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