Peking University, Nov.2, 2012: Li Yining, a famous economist and the Honorary Dean of Guanghua School of Management, delivered his keynote speech entitled Bridge the Income Gap between Urban and Rural Areas, Build a Harmonious Society on the opening ceremony of Beijing Forum at Diaoyutai State Guest House. In his speech, he analyzed the causes of the income gap between urban and rural areas as well as his solution and advice to this issue.
As prof. Li pointed out, after thirty years of Reform and Opening-up, the income gap between urban and rural areas was ever expanding, and this trend had not come to an end, which has become a social problem. The reason for the phenomenon is just the key to solve it in his eyes.
Quite urgent to be solved, Prof. Li analyzed the reasons in two aspects––primary distribution and secondary distribution. "To compare the urban areas with rural areas in China, the former has advantages in all three capital types–physical capital, human capital and social capital, which jointly create wealth", Prof. Li explained. As for the latter one, Prof. Li expressed his worries in the expanding gap. "In China, however, the secondary distribution is further widening the income gap caused by the primary distribution, thanks to the binary residential registration system that divides the urban areas and rural areas."
When asked in what way can peasants hold physical capital, Prof. Li illustrated that the foremost task is to determine land right and it is also the prerequisite to the transfer of land operation rights. Only the land rights can protect peasant's rights and interests and prevent their land from being misappropriated as well.
As for the human capital, Prof. Li also gave his opinion. "To change the situation, the allocation of educational resources has to be leveled. Some regions are drafting plans of educational reform.", in a county of moderate developed which he investigated, children in the villages normally study till the third grade at the most. The senior classes of primary schools and middle schools are operated by the local county/town governments. When it comes to the children of peasants' in mountain areas, all are required to live on campus without any payment.
It is also a major problem about the social capital of peasants. "It is known that urban dwellers are more resourceful in obtaining social capital. To deal with this problem, we should learn from the Wenzhou people. We should encourage peasants to come to the city, start their own business and learn from their experiences. In a word, social capital has to be found and accumulated on one's own. During the process, the key is to keep good reputation and credit." Prof. Li explained.
The effect of secondary distribution must be reversed, which means the gap should not be expanded after the secondary distribution. "The integration of social security reform in both urban and rural areas has to be accelerated to fund education, healthcare, cultural activities and public services, which would lead to equal distribution." Prof. Li expressed his opinion.
In addition, Prof. Li explained his idea that the one-way integration (peasants migrate to urban areas) should evolve to a two-way integration (do business in rural areas or migrate to urban areas). In this way can we increase the agricultural productivity and also further bridge the income gap between urban and rural areas.
Reported by: Meng Yiran
Edited by: Zhang Jiang
