The heavy reliance on traditional farming techniques in comparison with the technologically oriented urban side thus leaves the poor in a position of continual backwardness in both the domestic and global economy.

The wealth inequality in China… Change ), An Open Letter to the PM -There is no Planet B. Poor households either forego treatment, or travel to other cities for treatment, which can be expensive if the condition is severe. In 2017, thousands of migrant workers living in Beijing were evicted because they did not possess an urban hukou. [45], Pre-reform China had a system that severely restricted people's mobility, and that system has only slowly been reformed over the past 25 years. So, the growth of the urban population must have been slowed down by these restrictions.

Wong, C., Qiao, M., & Zheng, W. (2018). [43] Teachers are more attracted to urban sectors with higher pay and a slew of benefits. Economic reform has created a labor market in which people can search for higher pay, and one result of this is that salaries for educated people have gone up dramatically. [27] Urban-based economic policies adopted by the government contribute to the income disparities. China's quest to eliminate extreme poverty by 2020 is a headline-grabbing story. From 1990 to 2003, the ratio of per capita GDP of the richest to poorest province grew from 7.3 to 13. [35] And those whose parents move to urban areas in an effort to give these children a better life—and are not allowed by the Chinese government to take their children with them—are unintentionally traumatizing and damaging these children. Since the start of far-reaching economic reforms in the late 1970s, growth has fueled a remarkable increase in per-capita income, helping to lift more people out of poverty than anywhere else in the world: China's per capita income has increased fivefold between 1990 and 2000, from $200 to $1,000. Functions such as social security, justice, and even the production of national statistics are largely decentralized in China, whereas they are central functions in most other countries. The political response of China's government to the issue of rural poverty has been both lauded and criticized. The fact that many peasants cannot earn a decent living as farmers is a signal that their labor is more useful in urban employment, hence the hundreds of millions of people who have migrated.

In part, the sheer size of the country explains this degree of decentralization, but the structure of government and some unusual expenditure assignments also give rise to this pattern of spending. These disparities have emerged alongside a growing disparity in economic strength among the provinces. This incredible success was delivered by a combination of a rapidly expanding labour market, driven by a protracted period of economic growth, and a series of government transfers such as an urban subsidy, and the introduction of a rural pension. Changes to some policies could halt or even reverse the increasing inequality. [44], As a result, rural students often find themselves neither competitive enough to gain admissions to colleges nor employable for most occupations. [24] (See List of countries by income equality.). http://projectpartner.org/poverty/5-causes-poverty-china/. Since Deng Xiaoping began instituting market reforms in the late 1970s, China has been among the most rapidly growing economies in the world, regularly exceeding 10 percent GDP growth annually. China is at some risk of falling into this trap, because it has developed a highly decentralized fiscal system in which local governments rely primarily on local tax collection to provide basic services such as primary education and primary health care. [29] Meanwhile, the wages earned by the rural workers came mainly from growth in output only. [25] Lewis pointed out that, starting from a situation of 80% rural, the initial shift of some from low-productivity agriculture to high productivity urban employment is disequalizing. ( Log Out /  In China, the richest province has more than 8 times the per capita public spending than the poorest province. Since China joined the WTO in 2001, however, poverty reduction resumed at a very rapid rate, and poverty was cut by a third in just three years. It has been noted that compared to other developing countries, virtually all peasants in China have land. Starting from the pre-reform situation, some increase in income inequality was inevitable, as favored coastal urban locations benefited from the opening policy, and as the small stock of educated people found new opportunities. As a consequence, households are left to pay for their own needs to a remarkable extent. Weak tenure over rural land also limited the ability of peasants to benefit from their primary asset. Some of their population will relocate over time. Some of these zones were very large, amounting to urban areas of 20 million people or more. These differences in public spending translate into differences in social outcomes. The large trade surplus that has emerged in China has exacerbated the inequalities, and makes them harder to address. [16], The opening up measures have been accompanied by improvements in the investment climate. Press, 112-141. In, Jiwei Lou and Shuilin Wang, eds., China: Public Finance for a Harmonious Society, List of countries by percentage of population living in poverty, ActionAid efforts in dealing with income inequality in China, Young China Scholars Poverty Research Network, "China has almost wiped out urban poverty no. In China, over 750 million people have shaken off poverty, and among them, more than 93 million have done so in the past seven years alone. The amount of money received by each recipient was the difference in their income and the poverty line. In 2009, according to the China's National Bureau of Statistics, the urban per capita annual income at US$2,525 was approximately three times that of the rural per capita annual income. The biggest distortion, however, concerns moving land from rural to urban use. But at the same time the hukou system has slowed and distorted urbanization, without preventing it. Poor localities have not been able to fund these services, and poor households have not been able to afford the high private cost of basic education and healthcare. Nevertheless, these migrants are needed for economic development, and large numbers have in fact migrated. The whole reform program is often referred to in brief as the "open door policy". The shift to the household responsibility system propelled a large increase in agricultural output, and poverty was cut in half over the short period from 1981 to 1987. The Minimum Living Standard Scheme set regional poverty lines and gave recipients a sum of money. Liu, Y., Liu, J., & Zhou, Y. Aside from income inequality, there has also been an increase in inequality of educational outcomes and health status, partly the result of China's uniquely decentralized fiscal system, in which local government has been primarily responsible for funding basic health and education. But, at the same time, it is efficient to allocate some of the land out of agriculture for urban use. [39] China's Rural Poverty Alleviation and Development Outline from 2001 to 2010 led to certain government policy directly dealing with the issue of poverty with the removal of agriculture tax in 2006 and a program which the government paid rural families to plant trees on degraded land. [11][12] At the same time, this rapid change has brought with it different kinds of stresses. [29] Such biased allocation of government finances to the urban sector meant that the wages earned by urban workers also include these government fiscal transfers. In Transformation of Rural China, Jonathan Unger points out that the lack of taxation at the village level restricts the villages from dealing with the problems they face. Typically the urbanization of a country leads to mass migration from the rural areas to the urban. Otherwise, inequality can become self-perpetuating: if only high-income people can educate their children, then that group remains a privileged, high-income group permanently.

[9] To alleviate the situation, the Chinese government shifted its policy in recent years to encourage urban migration, fund education, health, and transportation infrastructure for poor areas and poor households. In practice cities usually give registration to skilled people who have offers of employment, but have generally been reluctant to provide registration to migrants from the countryside. Not surprisingly, then, enrollment rates are relatively low in poor areas and for poor families. By 2003, high-school enrollment was nearing 100% in the wealthier provinces while still less than 40% in poor provinces.[52]. As a result of revisions in PPP exchange rates, poverty rates for individual countries cannot be compared with poverty rates reported in earlier editions. This is true for inequality in household income or consumption, as well as for inequality in important social outcomes such as health status or educational attainment. Their inabilities to find jobs compounded by the rising costs of living in the cities have made many people fall below the poverty line. The trade surplus stimulates the urban manufacturing sector, which is already relatively well off. Education is a prerequisite for the development of human capital which in turn is an important factor in a country's overall development. The large productivity and wage gap between cities and countryside also drives a high rate of rural-urban migration, which has left millions of children traumatized due to parents who have left them to be raised by other family members, as the Chinese government does not allow parents who move to urban areas to take their children with them. With the large urban migration of the men, this leaves the women vulnerable and more unable to attain a skillset in another area other than labour and agriculture. In the period when reforms in urban areas were introduced, the real wages earned by urban workers rose inexorably. China in fact has one of the most decentralized fiscal systems in the world.[52]. But for reasons of both national efficiency and opportunity, some theoretical economists argue for the communist state to ensure everyone has some basic education and basic health care. Population below $1.90 a day is the percentage of the population living on less than $1.90 a day at 2011 international prices. [1][2][3] The dramatic progress in reducing poverty over the past three decades in China is well known. In a survey of 3037 villages in 2004, average primary school fees were 260 yuan and average middle-school fees, 442 yuan.

The richest county, the level that is most important for service delivery, has about 48 times the level of per capita spending of the poorest county. The majority of funds provided are from the local government and for families in the rural areas, their governments are often underfunded. in G. A. Cornea, ed., Inequality, Growth and Poverty in an Era of Liberalization and Globalization, Oxford U. The Urban-Rural Income Gap and Inequality in China, Review of Income and Wealth, 53(1): 93-126.

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