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China: Rural-Urban Inequality

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Economic Overview of China -Second largest economy in the world behind that of the US -$9.24 trillion GDP, as of 2013 -Huge growth since the open reform policies of the 1970s (Deng Xiaopeng) -Interesting interplay of autocratic government with some free-market principles -Mostly industrial based, though service industries in China are growing -latest areas of growth: food service, healthcare, e-commerce, cloud computing -Many Chinese businesses remain partially or fully owned by the state, 155,000 as of 2014 -Development abroad includes significant interest in Africa and growing interest projects in Latin America (particularly the mining industry)

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Economic Inequality -As of one year ago, income inequality in China surpassed that of the US -2012 GINI Coefficient of 0.474, worse than Peru, Philippines -According to a 2012 University of Michigan study, the wealth gap doubled between 1980 and 2010 and is now considered severe -Questions here about Chinese growth vs. sustainable development -Number of Chinese millionaires has increased nearly an average of 5 percent over the last decade or so -There is one facet of this inequality that is clear: the country gets wealthier from west east

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http://www.theatlantic.com/china/archive/2013/09/mapping-chinas-income-inequality/279637/

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Two smaller sub-points to consider: -Chinas largest cities are in the east -8 of 10 largest are located on the extreme eastern half of the county: (Shanghai, Beijing, Tianjin, Guangzhou, Shenzhen, Dongguan, Hong Kong, Hangzhou) -Indicative of development: people tend to migrate internally towards opportunities in cities; often rural sectors are left behind -Major ports and water access -6 of the 10 busiest ports in the world on are Chinas east coast -US, on the other hand, has two major coasts with major cities and concentrated wealth

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Diving Deeper -Data from 2012 actually suggest that rural workers on the coast are actually much better of than their peers further west -Potential factors for west/east wealth gap: -lack of quality investment in the west -trade barriers (CCP leaves it up to every province to create trade laws and tariffs; often trading inter-province is very difficult)

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A Problem to Consider Chinas Household registration system, Hukou -There is more inequality than reported in eastern cities because a lot of people there have illegally migrated from the west. Because they are not registered to do so, they dont count towards any economic statute in those eastern cities -This leads to lack of red tape and lack of opportunity and promise for Chinese citizens of the west; when they more east they can no longer receive government benefits/assistance

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Current Attempts The Chinese government's approach to solving inequality -The implementation of structural reforms as outlined in the 3rd Plenum Blueprint is underway. -should lead to slower, safer, and more sustainable growth--with a focus on innovation and entrepreneurship -Chinas 12th Five-Year Plan (2011-2015) forcefully addresses these issues -highlights development of services and measures to address environmental and social imbalances -setting targets to reduce pollution, to increase energy efficiency, to improve access to education and healthcare, and to expand social protection. -annual growth target of 7 percent signals the intention to focus on quality of life, rather than pace of growth -Efforts made by the Chinese government to reform in three key areas in particular: -cleaning up the house: promoting good governance through strengthening the legal framework and the anti-corruption campaign; -cleaning up the air: curbing pollution and preserving the environment; -clearing the path to even more engagement with the world, through Chinas further participation in the multilateral dialogue and through more international investment and trade.

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International Community The World Bank: -As of June 30, 2014, Bank cumulative lending (IBRD and IDA) to China was about $54 billion for 376 projects. -Concentrated in environment, transportation, urban development, rural development, energy, water resources management, and human development. -http://maps.worldbank.org/p2e/mcmap/map.html?org=ibrd& level=country&code=CN&title=China Examples...

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Gansu Rural-Urban Integration Project Improve Rural Roads and Highway Management -$300 million in loans from the WB -Benefitting hundreds of thousands in Western China -Rebuilding roads and bridges connecting 48 villages where most live below the poverty line -The project will make it faster and safer for villagers to travel or transport goods to cities, and thus help reduce the rural-urban poverty gap -Lack of all weather transport infrastructure impedes economic development -Only 43% of roads in village are paved

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Sichuan Chongqing Cooperation Guang'an Demonstration Area Infrastructure Development Project -275,000 residents in Chinas Sichuan province will have access to better infrastructure services -$100 million for basic urban infrastructure in Linshui County and Qianfeng District of Guangan Municipality -Storm water drainage, pipelines and treatment facilities, and green transport corridors -Strategic environmental and social impact assessments, improve the planning and management of capital investments and municipal assets, and develop investment promotion services. It will also provide industry skills training for low-income residents.

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Hebei Rural Renewable Energy Development Project Increase Access to Biogas in Rural Areas -$71 Million load from WB to invest in the installation and operation of six biogas facilities -Convert crop residues and livestock manure to biogas -Provide stable, clean energy to local rural residents -Production of crop residues and livestock manure, and use of coal for cooking and heating by rural residents -Worsened air and water pollution -Wheat, corn and cotton production alone generates about 61.8 million tons of crop residues every year -Livestock farms generate about 30.7 million tons of manure -Contaminates water/food supplies - 96,100 rural households in Chinas Hebei Province will gain access to clean, easy-to-use biogas for cooking

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Proposed Solutions 1.Invest in Education 2.Invest in Healthcare/ Infrastructure 3.Monitor Government Spending 4.Reform the Hukou System

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-Human capital approach - education is an investment in the future -more primary and secondary schools will create a more productive country in the future -Implement policies to reduce the amount of children doing field- work instead of going to school -Create more schools - often times schools are too far away for students so they do not attend or miss a lot of school -Require a high school education for all children -High school is usually the financial burden of the parents. Many rural parents cannot afford to send their children to high school -Invest in higher education in rural areas Invest in Education

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Invest in Healthcare/Infrastructure -Increase public funding for hospitals o Better technology o Match the quality of service to that in urban areas -Focus on distribution of healthcare services o More doctors and hospitals in the West -Create more railways and transportations systems in the West o Qinghai-Tibet Railway - proved to be successful o Transportation helps minimize the inequality gap by providing more opportunities for those in the West - easier commutes

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Monitor Government Spending -Cut down on lavish government spending -Implement spending limits for government officials -Crack down on corrupt government officials -Use savings to invest in rural areas -CPP released On Deepening the Reform of the System of Income Distribution - focus on reforming the salary income of government officials and executives - May be very difficult to accomplish

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Reform the Hukou System -Reform the Hukou system to include all Chinese citizens no matter their location - include western citizens who have moved east for work - stop bans on rural to urban migration -Extend government benefits and social security to citizens in the west -Allow migrant workers to still keep land rights

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Works Cited "China." Worldbank.org. Web. 20 Apr. 2015. Schiavenza, Matt. "Mapping China's Income Inequality." The Atlantic. Atlantic Media Company, 13 Sept. 2013. Web. 21 Apr. 2015. Chen, Sharon. "China's Income Inequality Surpasses U.S., Posing Risk for Xi." Bloomberg.com. Bloomberg, n.d. Web. 21 Apr. 2015. "Income Inequality in China and the Urban-rural Divide." Journalists Resource. N.p., 19 Aug. 2014. Web. 21 Apr. 2015. Chinas Education Gap A Surprising Factor in Rural Poverty Project Partner. Web. 20 Apr. 2015. Economic Growth and the Geographic Misdistribution of Health care resources: Evidence from China, 1949-2010 China Economic Review. Web. 20 Apr. 2015. Poverty in China: Inequalities, Migrant Workers & Access to Education May 2012. Web. 20 Apr. 2015 Chinas income gap solution: Too little, too late? Fortune. Feb 15 2013. Web. 20 Apr. 2015. "World Bank - Global Reach." World Bank - Global Reach. Web. 22 Apr. 2015.. "Press Release: IMF Managing Director Meets Senior Chinese Officials, Speaks at 2015 China Development Forum." Press Release: IMF Managing Director Meets Senior Chinese Officials, Speaks at 2015 China Development Forum. Web. 22 Apr. 2015.. "News." Hebei to Increase Access to Biogas in Rural Areas with Help from World Bank. Web. 22 Apr. 2015..