5.4: The Impact of Reform on Rural Income

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From the course by The Hong Kong University of Science and Technology

Chinese Politics Part 1 – China and Political Science

135 ratings

The Hong Kong University of Science and Technology

Chinese Politics Part 1 – China and Political Science

135 ratings

This course offers a conceptual framework for understanding China that highlights the intersection of politics and economics. It shows that rather than develop into a full blown market economy, state and party officials at all levels of the political system maintain significant influence in economic development. Such a “political” economy has had both positive and negative outcomes, which we will assess in detail. We also look at the origins, views, backgrounds and relations among leaders, and how those leaders make decisions about public policy and try to get those decisions implemented down through the system. China has few formal institutions through which citizens can participate in politics, but we will study the strategies Chinese people use to try to influence their leaders’ decisions. Finally, we assess China’s future and whether rapid economic development and the emergence of a vibrant middle class will push China towards greater democracy or whether the single party system is likely to survive into the future. The course is a quite useful background for Chinese Politics Part 2 – China and the World. Course Overview video: https://youtu.be/7FpNL67EbE4

From the lesson

Module 5: China’s Domestic and International Political Economy

5.1: Six Components of China's Political Economy7:46

5.2: China’s Political Economy on the Eve of Reform12:35

5.3: Impact of Reforms on China’s Political Economy10:29

5.4: The Impact of Reform on Rural Income3:38

5.5: China’s Township and Village Enterprises (TVEs), 1984-199412:44

5.6: Role of the Public Sector in China's Political Economy12:41

5.7: Central-Local Financial Relations9:15

5.8: China as a “Trading State”12:05

5.9: Dilemmas of a “Trading State”8:17

5.10: Chinese Firms “Going Out”12:45

Meet the Instructors

David Zweig
Chair Professor of the Division of Social Science and Director of Center on China’s Transnational Relations

[MUSIC]

Rural reform or reform in general also had a very big impact on rural income.

And the comparison when we compare urban and rural income,

we can see a significant change.

The gap that had existed before really decreased significantly,

so that between 1978 and 1984, rural incomes rose by 12% annually,

while urban incomes rose only 6.5% annually over that period.

Now, that didn't last, so in some sense it was a shorter term boost.

Because in 1984, the state started to pay more attention

to urban industrial reform, that begins a period of urban reform.

And they allowed the prices of consumer and industrial goods to go up

to stimulate the urban economy, but that also meant that urban income's went up,

worker's incomes went up and so without rural incomes going up as fast.

So that by 1994, urban rural income gap was greater

than it was on the eve of the rural reform back in 1978.

And this bar chart I think, clearly shows the fact that in the early

period of reform from '78 to '84, the rural areas do do remarkably well.

Right?

The annual growth rate was 12% a year above 12% a year.

And here we can see that the urban growth rate was just above 6% a year.

So it's just about double.

But then by '85 As I mentioned,

when the emphasis turns to urban reform, then we see

that the rural areas' incomes just do not grow as fast as the urban areas'.

And this continues right through 1994, where the urban growth rate

is faster than the rural income growth rates.

Nevertheless, what we do see

over this whole period is a remarkable decrease in poverty.

And when people talk about sort of the major contribution of the Communist Party,

the Reform Era, Dung Chow Ping, all those kinds of things.

The importance of the economic reform versus political reform,

this is one of the key factors that everybody focuses on.

Which is just the simple fact that between 1978 and 1995, the number of people living

under the national poverty line decreased from 270 million to 70 million.

And by 2004 it was down to 30 million.

So, that by 1997, nominal GDP per capita

reached US dollars 860, so that the World Bank in fact reclassified China

from a low-income group to a lower middle income group.

And by 2003, the nominal GDP per capita had actually gone up to

a thousand US dollars per person.

And so we can see again visually, this bar chart shows you the remarkable decline,

this remarkable decline in the amount of people who are under

China's national poverty line between 1978 And 2005.

It's just really quite remarkable.

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