Rural Poverty in China: Problem and Policy Gregory c chow (8/9/06)

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Source : Rural Development Statistics 2002-03, National Institute
              of Rural Development.

Year: Period of fiscal year in India is April to March, e.g. year shown as 1990-91 relates to April 1990 to March 1991.

As is well-known, India did not experience a rapid economic development between 1978 and 2000. This is seen by the fairly slow reduction in the fraction of population below poverty line and by the relatively small rates of growth, relative to China, of India’s per capita Net State Domestic Product (NSDP) in constant prices in recent years as shown in Table 5. From the World Development Indicator database, one finds that for the year 2004 China’s per capita GDP was 5,495 in PPP (international $) while India’s was merely 3,115, showing China has gone much further in its development path than India.

Table 5 Growth of Per Capita NSDP at 1993-1994 Prices in India {(As on 30.11.2004) from 1994-5 to 2003-4























Source: Central Statistical Organization (see
On the third statement that the abuse of power is primarily a Chinese problem, one can cite a number of factors special to China. As pointed out earlier, the abuse of power by local officials who consider themselves rulers over the peasants has its root in Chinese history and the power has increased by the authority given to them by the PRC government. The peasants now have higher income and more economic resources, including the right to use public land, creating opportunities for the bureaucrats to exploit. If the economy were not rapidly growing the market value of the land for use in urban development would be much lower and less worthy of illegal confiscation. All these factors do not exist in India.

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7. Conclusion
In this paper I have examined three kinds of statistics on rural poverty and suggested that the problem of rural poverty has three components: income disparity, policy neglect of the central Party and government leadership and violation of the rights of the farmers by local party officials. After studying the proposed solution of the government I have raised one set of questions concerning possible difficulties in the implementation of the government policy to take away the taxation power of county governments and to eliminate the operational functions of township governments in five years and in the interim not to allow them to operate enterprises as they have been accustomed to do. I have also suggested a policy to protect the rights of the farmers to the use of land contracted to them, to compensate them for the illegal seizure of their land by severe punishment of party officials who violate these rights and by exposing the violations by giving the news media more freedom. Although the solution of the san-nong problem may take some years economic forces will naturally enrich the farmers in the future as in the past, if social discontent does not seriously interrupt the economic process under a government policy that protects the basic rights of the farmers against infringement by the local officials.

Acknowledgement. I would like to thank Harvey Lam, Jianping Mei, Yan Shen, Xiaobo Zhang and participants of the Conference on Economic Development of Western China organized by George Tolley at the University of Chicago and of my lecture in the Contemporary Issues in the Chinese Economy Series sponsored by the Department of Economics and Finance of the City University of Hong Kong for helpful comments and the Center for Economic Policy Studies and the Gregory C Chow Econometric Research Program at Princeton University for financial support in the preparation of this paper.

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