The imbalance of economic development. between urban and rural areas in China. Author: Jieying LI

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1 The imbalance of economic development between urban and rural areas in China Author: Jieying LI i. Introduction Before 1978, China was one of the poorest countries in the world; while in the past twenty s, the economy of China grew as an amazingly quick speed, which has made an economic miracle in the world. However, the economic development between urban and rural areas in China is imbalance, and the difference of family income between urban and rural residents is still enlarged. This paper will introduce the economic growth in China in the past twenty s and analyze the disparity of economic growth and income between urban and rural areas. ii. Economic growth in China in the past twenty s In 196, China was one of the poorest countries in the world, the GDP per worker in China then was just as 2% of the GDP per worker in USA. However, after 1978, the economy of China has enjoyed a rapid growth period, which has created a surprising economic miracle to the whole world. The following table shows the increase of GDP and its growth rate from 1978 to 22, and the GDP per person and growth rate of GDP per person within that period. GDP(billion RMB 1RMB=.1EURO) growth rate of GDP GDP per person (RMB 1RMB=.1EURO) Growth rate of GDP per person

2 Table1: GDP and Growth rate of GDP in China from 1978 to 22 GDP per person and Growth rate of GDP per person in China from 1978 to 22 [1] Table1 demonstrates that the GDP in China has increased from (billion RMB) to 479.6(billion RMB) in the period between 1978 and 22, which is more than thirty times increase. And the increase of the GDP per person is nearly the same rate of that of total GDP, from 379(RMB) to 7997(RMB). Using the data of table1, the following graph can be drawn out. growth rate of GDP and GDP per person from 1978 to The growth rate of GDP in China Figure1: The growth rate of GDP and GDP per person in China from1978 to 22 growth rate of GDP Growth rate of GDP per person [1] From Statistic annual of China in 23

3 The figure above shows the growth rate of GDP and growth rate of GDP per person from 1978 to 22. Within that period, the average annual growth rate of GDP had reached about 9.4%, which was nearly as twice more as the average level in the whole world. Further, the figure demonstrates that there are four growth peaks within the 25 s, which are separately around the s of 1978, 1984, 1992, 21. These four growth peaks might result from the four significant economic innovations in Chinese history: the rural economic system innovation began in 1978; the urban economic system innovation began in 1984; the policy of encouraging some areas developing first and then driving the dropped behind regions around 1992; joining in the WTO in 21. Further, the two growth rate curves show the same variation tendency. That is to say the GDP per person changed follow the GDP within the past 25 s. This may be the contribution of the family planning policy. From 1978, Chinese economy has been rocketing as a rapid speed. However, there is still large difference of the GDP compared with developed countries. The following graphs show the GDP and its growth rate in China, Japan and USA. Even though China has the greatest growth rate among the three countries, the GDP is just as 1/5 as that in USA in 22. Considering the GDP per person, China just ranks in the poorest countries group in the world. GDP(billion USD) Comparison of GDP in China,Japan and USA China Japan USA China Japan USA China Japan USA GDP(billion USD) Figure2: Comparison of GDP in China, Japan and USA [2] [2] From Chinese economy statistical Data 22

4 Comparison of growth rate of GDP in China,Japan and USA 12 growth rate of GDP growth rate of GDP in China growth rate of GDP in Japan growth rate of GDP in USA Figure3: comparison of growth rate of GDP in China, Japan and USA [3] iii. Imbalance of economic development between urban and rural areas It is true that Chinese economy has grown a lot in the past 25 s; however, the economic development in the whole country is imbalance, the main embodiment of which is the large inequality of income distribution, especially between urban and rural areas. A. Great disparity of income in China The following figure shows the Gini coefficient in some in China. From 198 to 21, the Gini coefficient has increased to.45, which has exceeded the borderline of income distribution balance level (.4). [3] From Chinese economy statistical Data 22

5 Gini coefficient in China gini coefficient Gini coefficient in China Figure4: Gini coefficient in some s in China [4] Figure5 shows the Gini coefficient for both urban and rural areas in some s, we can see the Gini coefficient is much larger in rural area than in urban area, hence in rural area the income distribution is more unequal. Comparison of gini coefficient in urban and rural areas in China gini coefficient Gini coefficient in urban area Gini coefficient in rural area Figure5: Comparison of Gini coefficient between urban and rural areas in China [6] B. Difference of income growth between urban and rural areas In order to analyze the disparity of income between urban and rural areas, first we study the change of income both in urban and rural areas in the past fifteen s. [5] From the paper Gini coefficient and its calculation, Ren Qunluo [6] From the paper Gini coefficient and its calculation, Ren Qunluo

6 Figure6 shows the comparison of family income per person between rural and urban areas from 1989 to 23. In 1989, the difference of family income per person was less than 2 RMB, but in 23, the difference has increased to more than 6 RMB, nearly a three times increase. Within this period, the growth rate of family income per person in urban area was much larger than that in rural area, which further enlarged the income disparity between urban and rural areas. Comparison of family income per person between rural and urban areas in China ( ) family income per person RMB(1RMB=.1Euro) family income per person in ruralarea RMB(1RMB=.1EUR O) family income per person in urban area RMB(1RMB=.1Eur o) Figure6: Comparison of family income per person between rural and urban areas in China ( ) [7] Growth rate of family income per person ( ) growth rate of family income per person 4.% 3.% 2.%.%.% Growth rate of family income per person in ruralarea Growth rate of family income per person in urban area Figure7: growth rate of family income per person in urban and rural area in China ( ) [8] The curves in Figure7 demonstrate that there are four phases for the change of [7][8] Drawn from table2 in appendix

7 difference of family income per person between urban and rural areas. In the first phase ( ) and third phase ( ), the difference was reduced; while in the second phase ( ) and forth phase ( ), the difference was magnified. Hence, in the period from 1991 to 1994 and that from 1998 and 23 the disparity of income between urban and rural areas was really enlarged. C. Disparity of income between urban and rural areas among regions After studying the variation of difference of income between urban and rural areas within past fifteen, we can compare the disparity among regions. Figure8 shows the income per person both in urban and rural areas in 31 provinces of China in 23. The geographic income distribution demonstrates that people in the East part and some developed areas like Beijing and Guangdong are much richer than those in West and Middle part of China, unless in urban or rural areas. And from figure9, we can directly see the ratio of income per person between urban and rural areas among the 31 provinces in 23. The disparity of income between urban and rural areas in the East region is significantly smaller than that in the Middle region; while the disparity of income between urban and rural areas in the Middle region is significantly smaller than that in the West region. Combining these two figures, we may discover another interesting result that the disparity of income between urban and rural areas is smaller in rich regions than in poor regions. This might be consonant with the phenomenon that income distribution in development countries is more equal than that in poor countries in the world. Comparison of income per person between urban and rural areas in different part of China in income per person in Beijing Tianjin Shanxi Neimenggu Shandong Liaoning Hebei Heilongjiang Jilin Yunan Hainan Guangxi Guangdong Shanghai Zhejiang Jiangsu Fujian Sichuan Ningxia Xinjiang Chongqin Qinghai Gansu Shanxi Xizang Henan Anhui Jiangxi Hubei Hunan Guizhou North South East West Middle Name of province income per person in urban area income per person in rural area Figure8: Comparison of income per person between urban and rural areas in different part of China in 23 [9]

8 ratio of income per person between urban and rural areas in different part of China in ratio of income per person between urban and rural areas Beijing Tianjin Shanxi Neimenggu Shandong Liaoning Hebei Heilongjiang Jilin Yunan Hainan Guangxi Guangdong Shanghai Zhejiang Jiangsu Fujian Sichuan Ningxia Xinjiang Chongqin Qinghai Gansu Shanxi Xizang Henan Anhui Jiangxi Hubei Hunan Guizhou North South East West Middle Name of province Figure9: Ratio of income per person between urban and rural areas in different part of China in 23 [] iv. Conclusion In the past twenty s, China has written a fantastic story of economic growth in the world. However, the economic development between urban and rural areas is quite imbalance, and the disparity of income between urban and rural residents has still been enlarged. The Gini coefficient of the whole country persists increasing, which implies greater inequality of income distribution in the future. Therefore, economic innovation is needed to narrow the economic disparity between urban and rural areas. [9][] From table3 in appendix

9 Appendix: Table2: Family income per person between rural and urban areas in China family income per person in rural area(rmb) Growth rate of family income per person in rural area family income per person in urban area(rmb) Growth rate of family income per person in urban area % % % % % % % % % % % % % % % % % % % % % % % % % % % % % 8472 % 1RMB.1EURO From Statistical annual of China in 23 Table3: Income per person in urban and rural areas among 31 provinces in China in 23 Part Province income per person in urban area income per person in rural area ratio of income per person between urban and rural area The whole country North Beijing Tianjin Shanxi Neimenggu Shandong Liaoning

10 Hebei Heilongjiang Jilin South Yunan Hainan Guangxi Guangdong East Shanghai Zhejiang Jiangsu Fujian West Sichuan Ningxia Xinjiang Chongqin Qinghai Gansu Shanxi Xizang Middle Henan Anhui Jiangxi Hubei Hunan Guizhou From Statistical annual of China in 24