Stagnation Without Equity: Patterns of Growth and Inequality in China's Rural Economy

The flood of economic information from China in recent years has permitted reassessment of the "Chinese model of development" and the extent to which China's own development experience has conformed to it. The prevailing consensus of the 1970s concerning the substance of the model itself-typically characterized in terms of the Chinese leadership's objectives and priorities and its strategy for pursuing them-has stood up quite well. The same cannot be said about past appraisals of the extent to which China's economic reality has been reshaped to accord with the model's prescriptions. One of the most widely remarked elements of the Chinese model is the high priority assigned to regional objectives and, more specifically, to "balance" in the distribution of productive capacity and equity in the distribution of income and, hence, consumption. During the Maoist era (i.e., prior to 1979), the central government pursued regional objectives through such measures as interregional transfers of investment resources (effected via the planning system), subsidization of health and education expenditures in poor regions, and attempts to maintain a safety net of state relief (effected largely via control of grain surpluses). In short, there is little doubt that prior to 1979 the Chinese leadership placed an unusually high value on the spread of modern growth and the improvements in welfare associated with it and persistently acted to limit the emergence or widening of interregional disparities.' Although China's post-Mao leaders have shown greater concern with efficiency and with the potential trade-offs between efficiency and such goals as balance and equity, their continuation of many redistributive policies indicates that they have not abandoned regional objectives. But how successful has China been in achieving these objectives?

Shenggen FanInternational Food Policy Research Institute and Institute of AgriculturalEconomics of the Chinese Academy of Agricultural SciencesLinxiu ZhangCenter for Chinese Agricultural Policy of the Chinese Academy of SciencesXiaobo ZhangInternational Food Policy Research InstituteI. IntroductionChina is one of the few countries in the developing world that has madeprogress in reducing its total number of poor over the past 25 years.

So What If There Is Income Inequality? The Distributive Consequence of Nonfarm Employment in Rural China

This study aims to investigate the sources of income inequality in rural China. The regression-based decomposition approach is employed to measure the relative contribution of each determinant to net income of rural residents in China. The analysis is based on a unique database of financial development compiled at the county level. This study contributes to the literature on income inequality in China by filling a gap in existing literature which is based mainly on provincial and survey data. The results clearly reveal that financial development, industrialization, the development of the tertiary sector and employment are important income determinants and contributors of intercounty inequality in rural China. The findings may provide valuable information for combating inequality in the years ahead.

The emergence and eventual prevalence of the household responsibility system, which replaces the production team system as the unit of production and income distribution, has brought about dramatic changes in China's rural areas since 1979. This institutional change has resulted in remarkable growth in agricultural productivity.' However, in the literature on collective farms, a theory that is capable of explaining the causes and effects of this change is yet to be developed. The formal theory about collective economies developed so far by Ward, Domar, Sen, Oi and Clayton, Bradley, Maurice and Ferguson, Cameron, Bonin, Chinn, Israelsen, Putterman, and others suggests that the allocation of resources in a collective farm is efficient at least in

In developing economies, rural income inequality remains a persistent and pressing challenge, this study identifies grain processing clusters as a pivotal factor for mitigating disparities. Based on the National Fixed Point Survey (NFP) from 2004 to 2017, we constructed an unbalanced panel dataset covering 2300 counties. Using the National Economic Industry Classification Code, we identified information on rough and deep grain processing enterprises in the China Academy for Rural Development-Qiyan China Agri-research Database (CCAD), thereby generating a unique dataset for grain processing clusters. Employing a two-way fixed effects model, we empirically analyze how grain processing clusters affect rural income inequality in China and explore the underlying mechanisms. The baseline regression results indicate heterogeneity in the impact of grain processing clusters on income inequality. Deep processing clusters significantly reduce both farm and non-farm income inequality, whereas rough processing clusters have a significant effect only on non-farm income inequality. Mechanism analysis reveals that grain processing clusters primarily enhance the income of low-income households through three channels: providing inclusive employment opportunities, accelerating the deepening of capital, and increasing grain revenues, thereby reducing the extent of inequality. Heterogeneity analysis further demonstrates that this effect is more pronounced in China’s major grain-producing regions and central areas. The research results of this paper comprehensively analyze the effective path to reduce income inequality in rural China while ensuring food security, providing valuable insights for policymakers.

The Ethnic Minority‐Majority Income Gap in Rural China during Transition

A new ordered family of Lorenz curves with an application to measuring income inequality and poverty in rural China

In this article we analyze trends in income inequality and the distribution of income in rural China from 1987 to 1999. We find an uneven but long‐run increase in inequality in rural China and show that nearly half of the rural population was not much better off in 1999 than at the start of the period. We rule out geography as the most important factor for explaining income differences and the increases that occurred over time. Much more important were growing differences between households living in the same village, province, or region. We also find that access to nonagricultural incomes from local wage employment and family businesses contributes to inequality but that employment outside the county in which a household lives and accessed through temporary migration is relatively equalizing. Finally, we document important strengths and weaknesses of the primary data set used for our analyses relative to other data sources available for study of inequality and poverty in rural China.

The objective of this paper is to understand the effects of China’s migration on source communities and to discuss their policy implications. We draw from New Economics of Labor Migration (NELM) theory to understand how migration and migrant remittances can relax or tighten market constraints in China’s rural economy. Using simultaneous-equation econometric techniques and household survey data from China, we estimate net, sectorspecific effects of migration on rural household income, focusing on farm production and self-employment. Our econometric findings indicate that the loss of labor to migration has a negative effect on household cropping income in source areas. However, we provide evidence that remittances sent home by migrants positively compensate for this lost-labor effect, contributing to household incomes directly and indirectly by stimulating crop and possibly self-employment production. This finding offers evidence in support of the NELM hypothesis that remittances loosen constraints on production in the imperfect-market environments characterizing rural areas in less developed countries. Taking into account both the multiple effects of migration and the change in household size, participating in migration increases household per-capita income between 14 and 30 percent. Migration and Incomes in Source Communities: A New Economics of Migration Perspective from China China is experiencing the largest peacetime flow of labor out of agriculture ever witnessed in world history (Solinger, 1999; Rozelle et al., 1999). Despite the rapid expansion of labor migration, China’s work force is still disproportionately employed in agriculture compared to other countries at similar levels of per-capita GDP (Taylor and Martin, 2001). Hence, as China’s economy continues to expand, the flow of labor to urban areas will continue and even accelerate (Johnson, 1999). The massive flow of labor away from farms has intensified research interest in China’s migration in recent years. However, as in the broader literature on migration in less developed countries, most recent studies on China’s migration have focused on determining the size and composition of the labor flow, macroeconomic implications of increased migration, and the effects of migration on urban areas (Zhao, 1999; Yang, 1999; 1997). Less emphasis has been placed on researching the effects of migration on the rural communities that migrants leave, even though evidence shows that the rural household in the village of origin is typically the central concern of all those involved in migration– both those who leave and those who stay behind (exceptions include Wang and Zuo, 1999; Bai, 2001). Moreover, the recent increase in migration has left policy makers particularly concerned regarding the way source communities will be affected (MOA, 1999). They are concerned that as labor flows away from farms, food production and crop income will decline, potentially threatening China’s food security. Furthermore, policy makers are concerned about the increasing gap between urban and rural household incomes. If migration exacerbates this gap, some fear that as it grows rural residents eventually will flood cities ill-equipped to absorb them. Others fear that discontent over a rising urban-rural income gap could even spill over into political unrest (Yang, 1999). Because China’s markets and other modern economic institutions are still relatively undeveloped, migration may play a pivotal role in creating or overcoming constraints caused by the lack of well-functioning markets and/or institutions (Knight and Song, 1999; Benjamin and Brandt, 2000). The “new economics of labor migration” (NELM) literature analyzes migration as a household decision rather than as an individual decision (Stark, 1991). The NELM hypothesizes that rural households facing imperfect market environments decide

Digital technology access, labor market behavior, and income inequality in rural China

Using village data from samples covering 6 provinces, 36 counties and 216 townships, the income inequalities within and between townships in rural China are assessed. The Theil index and the mean logarithmic deviation methods enable us to test income inequality at the township level, and to decompose it into intra‐regional and inter‐regional at county and provincial levels. In the present paper, we also decompose income inequalities between and within the nationally designated poor counties (NDPC). The results show that approximately two‐thirds of the income inequality in rural China would be eliminated if measures and policies were targeted at the county level. This study also confirms the rationale that China's poverty alleviation strategy of focusing on poor counties based on the inequalities between NDPC and non‐NDPC accounts for the most inter‐province inequality.

Impacts of Migration and Remittances on Ethnic Income Inequality in Rural China

Measuring inequality can be challenging due to the limitations of using household income or expenditure data. Because actual energy consumption can be measured more easily and accurately and is relatively more stable, it may be a better measure of inequality. Here we use data on energy consumption for specific devices from a large nation-wide household survey (n = 3,404 rural households from 12 provinces) to assess inequality in rural China. We find that the overall inequality of energy consumption and expenditure varies greatly in terms of energy type, end-use demand, regions and climatic zones. Biomass, space heating and cooking, intraregional differences, and climatic zones characterized as cold or hot summer/cold winter contribute the most to total inequality for each indicator, respectively. The results suggest that the expansion of infrastructure does not accompany alleviation of energy inequality, and that energy affordability should be improved through income growth and targeted safety-net programmes instead of energy subsidies. Inequality in China ranks as one of the highest in the world. Using household energy consumption data, this study shows that deriving energy from biomass, use of energy for space heating and cooking, and intraregional differences are major contributors to consumption inequality in rural China.

A considerable literature exists on the measurement of income inequality in China and its increasing trend. Much less is known about the driving forces of this trend and their quantitative contributions. Conventional decompositions, by factor components or by population subgroups, provide only limited information on the determinants of income inequality. This paper represents an early attempt to apply the regression‐based decomposition framework to the study of inequality accounting in rural China, using household‐level data. It is found that geography has been the dominant factor but is becoming less important in explaining total inequality. Capital input emerges as a most significant determinant of income inequality. Farming structure is more important than labor and other inputs in contributing to income inequality across households.