Social Sciences in China (Chinese Edition)

No.4, 2013

Development Strategy, Urbanization and the Rural-urban Income Disparity in China

(Abstract)

Chen Binkai and Lin Yifu

This study takes a perspective from governmental development strategy to examine the causes for the underdevelopment of Chinese urbanization and the rising inequality in rural-urban income. The results show that the governmental strategies that aim to encourage the prior development of capital-intensive sectors have led to a relative decrease in the employment demand in urban sectors, which in turn retards the urbanization course, bans the effective migration of rural residents into cities, and increases the rural-urban income disparity. Our study uses the Technology Choice Index (TCI) as a measure of the extent of governmental policy support for capital-intensive sectors, and employs the provincial panel data in 1978-2008 to test the theoretical hypothesis. The study also reveals a U-shaped tendency of Chinese rural-urban income disparity in the course of economic development.