ABSTRACT
Since the late 1970s when China instituted economic reforms and opening up, the country has witnessed rapid economic growth and gradual improvement in the population’s living standards. Nonetheless, the consumption divide between urban and rural residents persisted and even expanded. According to data from China’s National Bureau of Statistics, between 2001 and 2005, consumer spending in urban areas was three times that of rural areas. This is a significant increase from that in the 1980s and 1990s, when the gap was around two times. 1
As we entered the twenty-first century, the central government adopted a series of policies to promote the social and economic development of rural areas, such as increasing investment in rural infrastructure and agriculture, raising prices for agricultural products, abolishing agricultural taxes on peasants, and eliminating tuition fees for the nine-year compulsory education. These have led to a significant improvement in the living conditions of rural residents. Income of rural residents has grown faster than that of urban residents, and as a result the urbanrural income gap narrowed. Moreover, China’s urbanization accelerated in the last ten years, which benefited some rural residents. The question remains as whether urban-rural gap in consumption narrowed as well.
