Public Policy and Long-Term Trends in Inequality in Rural China

Abstract

This chapter examines long-term changes in rural household incomes, inequality, and poverty in China from the late 1980s to 2013, with a focus on changes in public policy and the structure of rural incomes from 2007 to 2013. Implementation of pro-rural (huinong) policies during the first decade of the 2000s marked a historic shift in public policy, which previously was heavily biased toward the urban areas. Rural income growth accelerated between 2007 and 2013 mainly because of an upsurge of wage earnings, asset income, and imputed rent from owner-occupied housing. The share of agricultural income in total income fell to a historic low. These shifts contributed to the increase in rural income inequality from 2007 to 2013. During this period rural poverty continued to decline. The implementation of pro-rural public policies after 2000 led to small but significant improvements in the redistributive impact of public transfers.

Effects of Public Transfers on Income Inequality and Poverty in Rural China

“…Participants in the NRCMS reached 86 percent of rural residents in 2007 and 99 percent of rural residents in 2013 (Lin, 2018;Hoken and Sato, 2020). The NRSPS covered only 102.8 million rural residents, constituting 15.3 percent of the rural residents in 2010, and then grew rapidly in the 2010s, reaching 523.9 million participants (including urban residents) in 2018 (NBS, 2019).…”

“…The articulation of rural dibao and poverty-targeted policy was already an issue in the early pilot stage of rural dibao in the late 2000s(Wang, 2018).5According toLi (2019), the rural dibao standard reached a level equivalent to the offi cial poverty threshold in all the county-level administrative units by the end of 2017.6 We estimate our imputed rents from owner-occupied housing independently to maintain consistency of the estimations among the six rounds of the survey, incorporating minor revisions of the CHIP offi cial estimations. Details of our household income are summarized inHoken and Sato (2020).©2022 Institute of World Economics and Politics, Chinese Academy of Social Sciences Public Transfers, Income Inequality, and Poverty in China…”

A Tale of Two Countries and Two Stages: South Africa, China and the Lewis Model

“…Social benefits as a proportion of the final income of rural households increased from 0.7% in 2002 to 2.1% in 2007 and to 6.4% in 2013 owing to the expansion of social assistance such as pensions and minimum income guarantees, known as dibao (Gao et al, 2019, using CHIP data). Hoken and Sato (2019), also analysing CHIP, show that rural net transfer payments (transfers between households and both public and private sources, as a proportion of final income) grew from -4.0% in 2002 to 4.8% in 2007 and to 7.7% in 2013. Much of the increase in private transfers represented migrant remittances.…”

Inequality in China – Trends, Drivers and Policy Remedies

“…These policies included various direct subsidies, the abolishment of the agricultural tax and improvement of public services and social protection. These pro-farmer policies have been found to play an important role in increasing farmers' incomes and reducing the income gaps between urban and rural areas (Hoken et al, 2016;Li et al, 2013). and rural residents.…”

“…and rural residents. However, because of the differences in the scope and level of coverage among different groups, it is not clear to what extent the advances in the social security system have narrowed inequality nationwide (Zhuang et al, 2012;Li and Luo, 2010;Cai and Yue, 2016;Hoken et al, 2016).…”