Economic Growth, Income Distribution and Poverty Reduction in Contemporary China

By Xia, Qingjie | The China Journal, July 2006 | Go to article overview

Economic Growth, Income Distribution and Poverty Reduction in Contemporary China


Xia, Qingjie, The China Journal


Economic Growth, Income Distribution and Poverty Reduction in Contemporary China, by Shujie Yao. London: RoutledgeCurzon, 2005. xxviii + 271 pp. £75.00 (hardcover).

China's unexpectedly swift rise as an economic superpower at the beginning of the twenty-first century urgently calls for up-to-date studies. Using both the latest household survey and aggregate public data, this book examines China's development experiences over the last half-century, with special attention to rapid growth and social changes in the reform period, and identifies the factors that have contributed to China's fast economic growth. The author puts up two main arguments: "First, rapid growth has changed China's image as the most populous and one of the poorest nations in the world. China has in effect become one of the main economic powers in the global economy. second, economic growth must benefit all the people and should not be geared towards skewed income distribution which results in the disadvantaged groups becoming permanently disadvantaged" (p. xx).

This book could be divided into two parts. Chapters 1 to 4 provide nontechnical historical and macroeconomic accounts of the Chinese economy. Chapter 1 reviews the history of economic development in China since 1949 when China was founded. Chapter 2 explains the successes and failures of prereform China, and why economic reforms have brought about high growth in the Chinese economy and better living standards for its people. Chapter 3 assesses the performance and in-depth problems of China's agriculture and rural development. Here, the main argument is that the majority of rural problems are caused by the Chinese government's urban-biased policy. Finally, Chapter 4 explores the relationship between openness and economic performance and points out that openness, represented by international trade and FDI, has a positive impact on economic growth.

The second part (Chapters 5 to 11) contains heavy technical and in-depth analyses of China's economic growth, regional convergence, poverty and income inequality. Chapter 5 presents the author's methodological contribution on computing Gini coefficients using spreadsheets. Chapter 6 uses provincial-level data for the reform period of 1978-95 to examine the evolution of urban-rural inequality over time. Chapter 7 constructs panel data from the provincial-level data to explore whether provincial economies in China are converging and clubbing. Chapters 6 and 7 both reach the same conclusion-that regional economies are not converging and regional disparities in terms of income growth and expenditure are increasing. Chapter 8 demonstrates that non-farming income in rural areas and non-wage income in urban sectors caused more inequality within rural and urban communities respectively, using the household survey data from two provinces, Liaoning and Sichuan. Chapter 9, employing the Chinese Academy of Social Sciences (CASS) 1995 household survey and the Ministry of Agriculture 1998 household survey data, investigates how inequality affects poverty reduction. …

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