China’s Rural and Urban Inequality

During the last three decades, China has great changes, and these changes were originally a series of progressive political reform-driven. The late 70’s of the last century, the agricultural sector reconstruct, this is known as the “agricultural reform”, lasted for eight years. The subsequent second period known as the “urban reform” began in 1985, until now it is still continuing. The rapid development of industrialization, restructuring of state-owned enterprises, trade openness increased export tax rebates and financial assistance links, as well as the gradual liberalization of the financial markets are the characteristics of this period. But the “urban reform” also brought the negatively impact: that is caused the inequalities between urban and rural increased again. The causes of inequality caused by urban and rural China is multifaceted, but the main reason is that “duality system”.

Duality Household Registration System
For a long time, China has implemented an urban-rural division of the duality household registration system. This household registration system was set up under the planned economic system, which is the product of urban-rural dual structure. The children born by urban residents are the urban account, and the children born in rural which rural farmers account, and from generation to generation.

China was setup the high request for entry threshold of urban account, which was caused between urban and rural areas form an insurmountable gap. Unless the rural residents meet the harsh conditions requirements, otherwise not even think about into the city. In addition, coupled with the urban grain rationing system and the welfare housing allocation in the planned economy era, in effect, that was cut off the peasants into the city roads. This not only undermines farmers’ citizenship for the freedom of movement and choice of residence, but also objectively to curb the urban development.

Until now, although some local government has relaxed the restriction of urban entrance, but the duality household registration system has not really been broken.

Duality Employment System
In the planned economy era, the urban employment problem by the government planned to make arrangements in urban areas, while the peasants were employed in the rural production teams. The jobs in urban are first offer to urban residents, only when the urban labor supply cannot meet the needs of urban jobs, then will offer to rural residents, so only a small number of peasants to the urban were fortunate sought the jobs. In addition to the planned recruitment and enrollment, the government strictly controlled the peasants into the urban.

This system has 4 characteristic. First, policy support from the China’s government is inequality. For a long time, the China’s government was not bring the rural labor force into the national economic and social development plan, and they were not offer any special funds or project to support the rural labor force transfer to cities. A considerable period of time, the rural labor force cannot enjoy the vocational skills training from government. Even if the country has recently introduced training plan for peasant workers, but the amount of money and scale ratio of training are large differences compare with urban workers. In addition, the Government has not bring the management of peasant workers into the city’s comprehensive management, the expenses for operation paid by peasants was increased their finance burden, resulting in rural labor force and urban labor force in terms of employment inequality.

The second characteristic is employment pass inequality. Compared to the free movement of urban workers employed, the local government set up a number of restrictions and requirements in the transfer of rural labor employment, resulting in rural labor and urban labor have the great inequality in employment permit. For example: in some cities, the local government was stipulated the peasants to apply for a variety of procedures when they found the work in there, some local government also took the opportunity to collect various fees, increasing the cost of peasants to work elsewhere, resulting in an increasing burden on the farmers.

Third is labor and social security inequality. In the course of employment of rural labor force are often subjected to unfair treatment. Firstly, the labor contract is not standardized. Most peasant workers do not sign labor contracts with employers; even if the signing of a contract, but also mostly one-way restriction contract, that means only restrict on migrant workers, but not restrict on the employing units. Secondly, the unequal pay. Rural laborers and urban workers engaged in the same work, but not the same as remuneration. Thirdly, production and living environment is poor. Look from the working conditions, peasant workers often do the dirtiest and the hardest work, and the safety and health conditions of enterprise were do not meet requirements of country. Working time of peasant workers in general is 10-12 hours, sometime up to 14-16 hours.

Fourth are inequalities in social welfare. At present, farmers working in cities have not established the basic social security like medical care and injuries at work. When the peasant workers were injury suffered on the job or got the illness from the job, there is no corresponding system to protect their access to basic treatment costs, let alone compensate them. Although the state has issued the “Work-related Injury Insurance Regulations”, and explicitly requested that peasant workers into the insurance coverage of work-related injury, but still need to take some time for full implementation in China.

In recent years with China’s further reform, although the employment post implement the two-way choice, but the government will no longer restrict the farmers work in urban. However, some cities there are still occur a lot of the peasant discrimination policies on problem of employment, therefore urban enterprise recruitment is still biased towards urban dwellers. Some cities also expressly provides peasant workers are not allowed to enter in some industries, so mostly peasant workers in the city are do the dirty, tired, dangerous, and low wages jobs. Consequently, inequality employment opportunities for rural and urban residents still exist.

Duality System of Income Distribution
The city’s industrial workers income comes from wages, while the income of peasants is mainly derived from agricultural income. Compared to urban industrial sector with a capital of a large scale, high level of accumulation, follow the rules of increasing returns to scale, advanced production methods, the technological progress is fast, high production efficiency, high economic efficiency, structure and other characteristics to change rapidly and so on, agricultural development has been remarkably weak position. This is because the farmers are engaged in agriculture has inherent weak nature: get the relatively large natural environment and climate influence, small-scale capital, per capita’s cultivated lands are few, low levels of accumulation, backward mode of production, technological progress is slow, sale prices of agricultural products are lower than its value, etc. Therefore, the income level of farmers is often lower than urban workers, this also caused many farmers were abandoning agricultural work to work in cities.

In recent years, income disparities between urban and rural residents, and the income gap continued to widen. For example, rural per capita consumption expenditure in 2000 was only 33.4% of urban residents, 5.2% lower than in 1997, average declined 1.7% per annum. From an objective point of view, in the socialism stage, the income gap between urban and rural is impossible to eliminate, but the income gap between urban and rural should have a reasonable extent, this gap should be reduced gradually with the economic development, rather than the reverse.

Duality Education System
For a long time, China’s dual education system continues to attract a lot of controversy; this is because the Chinese government’s serious shortage of investment in education and “all the money” education business trend, resulting in the fact that education is not fair throughout China. The main reason for this inequality happened in the education system was: the government introduced the unfair policy in education. According to “Southern Weekend” reported: 75% of the compulsory education funds are burden by peasants. In this duality system, most of China’s spending on education has focused on the urban education, specially the higher education.

Sometimes, from newspapers and television news, we can see the rural schools are dilapidated, and even some rural schools did not have a classroom, the students are sitting on rocks to attend the class. In contrast, the urban schools are luxurious and beautiful, and their equipment is complete. In addition, the college entrance examination scores of rural candidates must be much higher than urban candidates, and then they are eligible to enter the same colleges or universities.

Day after day, the inequitable education system will resulting in more rural students are obliged to discontinue schooling. Therefore, the Chinese Government can no longer ignore these problems.

We can conclude that China’s dual system has created a heavy burden and unfair of rural residents. These burdens and inequality make the poverty life of peasants more difficult. As opposed to the high expenditure on education, the low income of peasants make they do not focus on education, coupled with inflated prices, many rural children are forced to work from an early age to earn money to alleviate the financial burden of the family. Duality systems will not only resulted in uneven distribution of wealth between urban and rural areas, and also led to situation of the rich people richer and the poor people poorer.

Finally, I hope the Chinese Government will eliminate the duality system, so that China’s economic development can be more comprehensive and powerful. I believe China will become a real powerful country, when the whole Chinese people were out of poverty.