International Development Planning Review

National market location, income levels and urban–rural inequality in China

International Development Planning Review (2009), 31, (4), 397–421.

Abstract

This article examines the relationship between market distance, inter-provincial income levels and urban–rural income inequality in China. It uses the curve estimation method to determine the best-fit models for the relationship. Regions near the market are found to have high urban and rural income levels and low urban–rural inequality. As distance increases, rural income declines faster than urban income, resulting in rising urban–rural inequality. Myrdal's concepts appear to be applicable to the Chinese experience of urban–rural inequality, and to explain why rural income declines with market distance faster than urban income. In remote regions, cities may have exerted a 'backwash' impact on their hinterlands, while cities in provincial municipalities and autonomous regions near the market may have yielded spread effects. A model is proposed to describe the relation between market location and urban–rural, urban and rural inequalities in China. The article compares market distance with other factors that affect urban–rural inequality and provides theoretical and policy implications for reducing inequalities to achieve sustainable development.

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Liu, Lee