Tuesday, April 29, 2008

Inequality and Northeast China

This National Geographic story on Northeast China (full story only in print edition, unfortunately) was compelling. I liked the map best.
"The bus is starting to roll down the rutted dirt road in Dongfa village, carrying the young worker and his wife away from this ghost town near the Russian border. ... Twenty-six years ago, his parents named him Wang Tieren, or Iron Man Wang. It was a tribute to the communist icon whose selfless toil symbolized the industrial muscle of China's Northeast, a region whose state-run factories and furnaces fueled the communist dreams of the People's Republic. The new Iron Man on the bus—silent, gaunt, a look of worry wrinkling his freckled brow—embodies the same region but in a challenging new era: Even as other parts of China flourish in the mad rush toward a market economy, once proud Manchuria (as the area is known abroad) has fallen on hard times; it, like Iron Man Wang himself, is desperately searching for salvation."

As an unfair comparison, here is the abstract from "Income Inequality During China’s Economic Transition" by Dwayne Benjamin, Loren Brandt, John Giles, and Sangui Wang (2005):
"This paper provides an overview of the evolution of income inequality in China from 1987 to 2002, employing three series of data sets. Our focus is on both urban and rural inequality, as well as the urban-rural gap, with the objective of summarizing several “first-order” empirical patterns concerning the trajectory of inequality through the reform period. We document significant increases of inequality within China’s urban and rural populations. In rural areas, increased inequality is primarily related to the dis-equalizing role of non-agricultural self-employment income and slow growth in agricultural income from the mid-1990s onward. Poverty persists, and tied in part to slow growth in agricultural commodity prices. In urban areas, the declining role of subsidies and entitlements, the increase in wage inequality and the layoffs during restructuring, have fueled the growth in inequality within urban areas. Poverty levels, however, are very low. We find that spatial (regional) dimensions of inequality are significant, but are much less important than commonly believed for both the urban and rural populations, and for differences between urban and rural areas. Accounting for urban-rural reclassification, which otherwise exaggerates the rising urban-rural gap, we find a relatively stable ratio of urban to rural incomes. This hides some geographical variation, however: The urban-rural gap is increasing more rapidly in interior provinces, where SOE’s had a more dominant role in economic activity in urban areas, than in coastal provinces where the non-state sector was more important earlier in the reform period."

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