Urban-rural divide in terms of income has grown

11/19/2019

Nov,19: Rural China accounts for more than 40 per cent of the country's total population of 1.4 billion. The Chinese government's claims of having lifted over 700,000 people out of poverty may not be accurate given the fact that there are structural obstacles that stand in the way of such massive poverty alleviation. This can only be achieved by much needed economic reforms. This has resulted in a widening of the gap between China's rural villages and its cities.
As indicated in the OECD’s 2017 economic survey of China (see table below), income inequality in the rural areas in China is consistently higher than that in the urban areas. The rural-urban divide can best be illustrated by comparing the ratio of disposable income of the top 20 per cent over that of the bottom 20 per cent of the rural areas against the same ratio of the urban areas. The higher the ratio goes, the more income inequality there is.

Thus it is seen that China faces a real challenge in terms of trying to lift poor people out of poverty. Recent indicators seem to suggest that more rural Chinese are slipping back into poverty. Not only are rural incomes declining, the urban-rural divide seems to be getting wider. With the Chinese economy slowing down to less than six per cent this year, and the likelihood of this trend continuing, it is likely that the impact of this will ultimately be felt in the rural countryside of China.