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There are several pieces of evidence to support this view. First, the gap in per capita income between rural and urban areas widened during the reform period, reaching a ratio of three to one. Three to one is a very high gap by international standards. Second, manufacturing wages have risen sharply in recent years, at double-digit rates, so that China now has considerably higher wages than much of the rest of developing Asia India, Vietnam, Pakistan, Bangladesh.

It is hard to imagine that manufacturing wages would have risen so rapidly if there had not been such controls on labor migration.

Third, recent studies focusing on migrants have shown that it is difficult for them to bring their families to the city, put their children in school, and obtain healthcare. So, the growth of the urban population must have been slowed down by these restrictions. One does not see in China the kinds of slums and extreme poverty that exist in cities throughout South Asia, Eastern Europe, Latin America, and Africa. Nevertheless, urbanization goes on: But at the same time the hukou system has slowed and distorted urbanization, without preventing it.

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The system has likely contributed to inequality by limiting the opportunities of the relatively poor rural population to move to better-paying employment. Just as Chinese citizens are either registered as urban or rural under the Hukou system, land in China is zoned as either rural or urban. Under Chinese property law , there is no privately held land. Urban land is owned by the state, which grants land rights for a set number of years.

Reforms in the late s and s allowed for transactions in urban land, enabling citizens to sell their land and buildings, or mortgage them to borrow, while still retaining state ownership.

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The biggest distortion, however, concerns moving land from rural to urban use. China is a densely populated, water-scarce country whose comparative advantage lies more in manufacturing and services than in agriculture. 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.

But, at the same time, it is efficient to allocate some of the land out of agriculture for urban use. In China, that conversion is handled administratively, requiring central approval. Farmers are compensated based on the agricultural value of the land. But the reason to convert land — especially in the fringes around cities — is that the commercial value of the land for urban use is higher than its value for agriculture. There are cases in which the conversion is done transparently, the use rights over the land auctioned , and the revenue collected put into the public budget to finance public goods.

But still the peasants get relatively poor recompense. There have been reports of cases where peasants complain and demonstrate because the conversions have not been done in a transparent way, and there have been accusations of corruption of local officials. Up until , the way in which agricultural land was being converted to urban land probably contributed unnecessarily to increasing inequality.

It has been noted that compared to other developing countries, virtually all peasants in China have land. If that asset could be used either as collateral for borrowing , or could be sold to provide some capital before migrants moved to the city, then it would have been helping those who were in the poorer part of the income distribution. The administrative, rather than market-based, conversion of land essentially reduced the value of the main asset held by the poor.

Market reform has dramatically increased the return to education , as it indicates that there are good opportunities for skilled people and as it creates a powerful incentive for families to increase the education of their children. However, there needs to be strong public support for education and reasonably fair access to the education system.

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Otherwise, inequality can become self-perpetuating: 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. China in fact has one of the most decentralized fiscal systems in the world.

China is much more decentralized than OECD countries and middle-income countries, particularly on the spending side. More than half of all expenditure takes place at the sub-provincial level. 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.

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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. These disparities have emerged alongside a growing disparity in economic strength among the provinces. From to , the ratio of per capita GDP of the richest to poorest province grew from 7. In China, the richest province has more than 8 times the per capita public spending than the poorest province.

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In the US , the poorest state has about 65 percent of the revenues of the average state, and in Germany , any state falling below 95 percent of the average level gets subsidized through the " Finanzausgleich " and any receiving more than percent gets taxed. In Brazil , the richest state has 2. Inequalities in spending are even larger at the sub-provincial level.

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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. These differences in public spending translate into differences in social outcomes. So too with the high-school enrollment rate: Poor areas have very little tax collection and hence cannot fund decent basic education and health care. Some of their population will relocate over time.

But for reasons of both national efficiency and equity , it would make sense for the state to ensure that everyone has good basic education and health care, so that when people move they come with a solid foundation of human capital. As a consequence, households are left to fend for themselves to a remarkable extent. Poor households either forego treatment or face devastating financial consequences. The situation in education is similar. In a survey of villages in , average primary school fees were yuan and average middle-school fees, yuan.

A family living right at the dollar-a-day poverty line would have about yuan total resources for a child for a year; sending a child to middle-school would take half of that. Not surprisingly, then, enrollment rates are relatively low in poor areas and for poor families. From Wikipedia, the free encyclopedia.

Poverty in China

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Labor Insurgency in China' C. Toward Non-imperial Geohistorical Categories' F. The End of the Third World as we Know it? He works on the historical ethnography of labour, work, activism, gender, state-sanctioned racism, and development in India and South Africa. He is the author of Fraternal Capital: Peasant-workers, self-made men, and globalization in provincial India Stanford University Press, , and is working on a monograph on space, race and activism in twentieth-century South Africa. He has written widely on economic and political change in India and the history of development thought.