ruralpovertyinchinaproblemandpolicy.docVIP

Rural Poverty in China: Problem and Policy Gregory C Chow (8/9/06) (Comments welcome.) Abstract: This paper describes the economic conditions of rural China regarding poverty. By dividing the problem of rural poverty into three components it explains why rural poverty is China’s No. 1 economic problem in spite of the significant improvement in the living standard of the rural population. After discussing the solution proposed by the Chinese government it raises two policy questions, one concerning a proposal to eliminate the operational functions of township governments in the streamlining of the local government structure and the second on the possibility of controlling the abuse of power by local party officials that infringes on the rights of the farmers. A comparison with the conditions in India is provided. 1. Introduction China’s rapid economic growth in the order of 9.4 percent per year since economic reform started in 1978 is well recognized. Many observers also agree that the momentum for further growth in the foreseeable future is assured. The large amount of wealth created and the insufficient attention given to the welfare of residents in the rural regions have created a large income gap between the urban rich and rural poor as well as opportunities of exploitation of the latter by local government and Communist Party officials. Hence the country’s leaders now consider the number one economic and social problem to be rural poverty despite the substantial improvement in the living standard of the rural population in recent years. In section 2 of this paper, I will examine the economic conditions of the rural population, its absolute improvement, its relative status as compared with the urban population and the increase in disparity in per capita consumption between regions. In section 3, I will