Impacts of Market Location on Rural Poverty and Income Inequality in China

Lee Liu

Chinese Economy, 2006, vol. 39, issue 3, 64-78

Abstract: The article applies the von Thünen agricultural land-use theory to examine spatial relationships between market location and rural poverty and inequality. Three national market centers were determined: Beijing-Tianjin, Shanghai-Nanjing-Hangzhou, and Guangzhou-Shenzhen-Zhuhai. Regression results show that distance from market has a strong impact on rural per capita income. Between 1978 and 1990, provinces both near and far away from market had higher per capita rural income, while those in the middle had the lowest. From 1991 to 2002, rural income was highest in provinces near the market, but dropped first quickly and then gradually along with distance from market. Remote provinces experienced the slowest increase in and the lowest level of rural income. The impact of market distance increased from 1991 to 2002. By the 2000-2002 period, distance explains 82 percent of the variation in rural income. Globalization of the Chinese economy and development policy were believed to be among major causes.

Date: 2006
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