The Rural–Urban Divide and the Evaluation of Political Economy in China

Abstract

China’s is an important economy. It accounts for about 20% of world population and for nearly 20% of the world’s poor. Moreover, it is becoming more important. During the period of economic reform– roughly the last 20 years – it has achieved a remarkable rate of economic growth: something like 8% per annum. By comparison with other communist or ex-communist countries, it has so far made a smooth transition from a planned economy towards a market economy. The Chinese economy presents fascinating challenges to economists, and Keith Griffin was one of the first Western development economists to accept the challenge (for instance, Griffin and Saith, 1981, Griffin and Griffin, 1983). As a group we first teamed up with Keith Griffin as members of an international project on income distribution in China, with he led with Zhao Renwei. The project was based on a very detailed and representative national household survey, designed by the team. It was an improvement on official surveys because it permitted empirical analysis at the micro (household and individual) levels, and because it used a broader definition of income, including the various forms of payment in kind which were important in China. The main output of the project was the book edited by Griffin and Zhao (1993). One of the most startling figures to emerge from it was the ratio of urban to rural household income per capita, which had a value of no less than 2.4 to 1. Recognising that this rural-urban divide deserved further study, we decided to accept the challenge (Knight and Song, 1999). There has always been a strong political economy element to Keith Griffin’s writings. Our contribution to this festschrift takes its cue from that. The explanation for the rural-urban