China’s Urbanization and the World Economy
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China’s Urbanization and the World Economy

Fan Zhang

This innovative book places China’s urbanization within a broader global context, including a detailed estimate of China’s total domestic market and its impact on the world economy.
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Chapter 7: Social aspects of urbanization

Fan Zhang


It was Mao's dream to create an equal society to minimize the difference between ordinary people and government officials. He was partially successful. The urban society was relatively equal, but the inequality between urban and rural residents was maximized. The economic reform since 1978 has enlarged inequality in Chinese society, a side effect from raising efficiency in the system. One of the guidelines of the reform was 'to let a small group of people get richer first', which has been realized 30 years later. The recent development of urbanization relocated wealth among individuals on an extremely large scale, through the redistribution of wealth and the changes in property values. Inequality is currently a serious problem in China. Under the planning system, the differences in income within urban and rural areas were trivial. But the difference between city and countryside was dramatic. To promote industrialization, the government manipulated the relative price between industrial products and agricultural products in the planned period before 1978. This price system and the agricultural product tax created a poor rural population. During the planned period, residents in the countryside were also excluded from the pension and healthcare insurance system in the cities. They did not have resident IDs (Hukou), and therefore had no right to live and work in the cities. Most importantly, they did not have food rations.

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