From Village to City: Reforming Urban-Rural Relations in China

This paper documents the increased urban-rural interaction in China and argues that the new developmental strategy apparently has helped narrow the urban-rural gap. Income differentials between peasants and workers have declined. Direct commercial interaction between peasants and rural factories and urban residents and urban factories have increased dramatically, and peasants have begun to play a significant role in developing the previously moribund urban service sector. Since 1984, rural surplus labor, previously hidden by the over employment of the rural collective sector, has begun to stream into China's urban centers, particularly the new small towns springing up in the countryside. At the same time, peasants are precipitating an increase in China's medium-size cities as well. Moreover, the creation of a vigorous rural economy, with its increased demand for consumer and producer goods and the closer integration of the urban and rural sectors, has generated strong pressures for the liberalization and decentralization of the urban economy.