Before China’s Open-Market Liberalization,the distribution of people’s income was basically led by the policy of equalization.However, after the practice of Open-Market Liberalization,Chinese government tended to pursue fast growth of economy, so the policy of equalization was changed into “effect first, and coexist with equalization.” Even though the modification did accomplish the rapid growth of the economy, accompanied with the growth is another problem of the enlarged gap between the rich and the poor in China. Especially after Deng Hsiao-Pin’s southern inspection tours, China government has made more aggressive sectional development policy and hence pushed the growth of economy even faster, and the unequal of people’s income remains the same. In order to shrink the gap, China government started to engage in “The Great Development of Western China,” but whether this project can solve the nation-wide unequal-income problem, or just benefit some of the local area remains unknown. Accordingly, this study will focus on the differences between the changes of people’s income in urban and rural area in China.
The core of this study is the income level of rural and urban areas, and the period of time analyzed is 10 years after Deng’s southern inspection tour, which is 1994~2003, and the geographic area of the study includes 30 provinces, cities, and autonomous regions in China. With the methods of tangent plane, time sequence, and model of random effect Panel Data, and the inspection to these policies: capital accumulation; industrial construction; possession; human resources; and western development, the study try to exam the income differences between people in rural and urban area, hence discover the factor that caused the enlargement of the gap between the rich and the poor. The study will also exam the effect of “The Great Development of Western China” policy to stop the enlargement of the gap between the rich and the poor.
The discovery from the study can be demonstrated in three aspects. First is the income level. In rural area, the income level is mainly influenced by the saving rate, the percentage of people who employed by enterprises, and the percentage of people with higher education. On the other hand, the income level in urban area is influenced by the percentage of people who employed by second-tier industry and non-government-owned enterprises.Second is the factor that caused differences between three areas. In rural area, the differences are mainly caused by education level and the percentage of people employed by enterprises. Nevertheless, the differences in urban area are mainly caused by the unequal employed rate in non-government-owned enterprises. Third is the influence to income level by “The Great Development of Western China.” Although the policy raised the income level in both rural and urban areas in three great areas, the growth in urban area were still faster than it in rural area. On the other hand, “The Great Development of Western China” brought equally apparent changes to the rural area everywhere, but its influence to the urban area only shown in western and central China. From the developing trend of income gap, it is enlarging in rural areas of Eastern, Central, and Western China. However, in urban area, the enlargement only happened in Eastern and Western China, and in urban area of Central China, the income gap is actually shrinking. Accordingly, till year 2003, the policy of “The Great Development of Western China” affects more on shrinking the income gap of the urban area in general, but affects much less to the rural area. The result shows that this policy’s effect is very limited to shrink the income gap of the rural area compares to its effect to the urban area.