４７【特集・研究ノート】

Urban−rural Divide and Its Implication toIntersectoral Resource Flows in China
Zhao CHEN＊［JEL 分類番号］Urbanization, rural‑urban segmentation［キーワード］ O43, O18

Professor Katsuji Nakagane s prgesentation

economies because of the Ricardian trap. That

IntersectoralChinais, the underdeveloped agriculture will result

Revisited Again─in memory of the latein poor production of grains, rising grain price,professor Shigeru Ishikawa focuses on a very

increasing industrial wage, decreasing indust-

important issue in China, which is urban‑ruralrial profit and investment rate, declining

development. This is a classical topic ingrowth and finally underdeveloped agriculture

development economics, which receives anagain. I partially agree with Ishikawa s

increasing interest from mainstream econo-

hypothesis that agricultural sector should

mists since the seminal work by Lewis (1954).

benefit from the development of industrial

Professor Nakagane thinks the statisticalsector with two different arguments. First,

analysis of China s national income and capital

underdeveloped agriculture does not necessa-

formation (Ishikawa, 1967) is one of Professor

rily result in rising grain price. Because, theIshikawa s contributions to the Chinese econo-

government could control the grain price at aResource

Flowsinmic studies. The presentation mainly compares

relatively low level as well as import graindifferent types of estimates of China s intersec-

from the international market. Second, there

toral resource flows (ISRF) and pays particular

could be another more important channel that

attention to the measurement of appropriate

might be harmful to future economic growth＊prices P .

because of the underdevelopment agricultural

As indicated by Nakagane s presentation,sector. Nowadays, Chinese government wants

one of Ishikawa s hypothesis is industry must

to push industrial upgrading due to theaid agriculture in contemporary developing

increasing labor cost. However, with an───────────＊ China Center for Economic Studies, Fudan
University, Shanghai, China. 200433. Email:zhaochen@fudan.edu.cn This short essay isbased on the comments by the author on
presentation by Prof. Katsuji Nakagane withthe title Intersectoral Resource Flows in China
Revisited Again .

underdeveloped agricultural sector, the ruralmigrants, who are main part of industrial
workforce could not improve their humancapital. As a result, the industrial upgrading
will not be successful due to lack of sufficient
skilled labor.
During the presentation, professor Katsuji

４８

中国経済研究第１２巻第１号

Nakagane also points out that the ISRF

existence of coupons allocating scarce resour-calculation could be ambiguous mainly because

ces in the cities, in comparison it was even

there seems to be no definite and exact way ofmore difficult for labor to move from theISRF calculation. I totally agree with thiscountryside to the city. If a peasant wanted toargument and also want to say more about themove into the city, he first had to obtain grain

urban‑rural divide in China and its implication

coupons. If moving out of the province, heto ISRF.

needs to obtain nationwide grain coupons.

In Chen and Lu s (2008) analysis, urban‑

Since he didn t have grain and oil rationing

rural integration was divided into spatial, social

registration in the city, he couldn t obtainand political integration, that is, the urban‑

housing, non‑staple foods, energy supply etc

rural segmentation created by the Hukou

welfare and benefits, so even if one entered thepolicy has different manifestations in different

city it was hard to stay long. It would be astages. Similarly, we can distinguish between

Herculean task for peasants to enter the city

geographicalmarketand obtain urban Hukou. In the 1977 Ministry

segmentation, urban public services segmen-of Public Security Provisions on Handling

tation and segmentation in say over policy.

Hukou Transfers , it was clearly indicated thatsegmentation,

labor

Geographical urban‑rural segmentation first

agricultural Hukou transfers to nonagriculturalrefers to peasants being tied to their land,

Hukou and migration to Beijing, Shanghai andunable to work in cities for a prolonged period

Tianjin from other cities were to be strictlyof time. When the Hukou system was firstcontrolled, whereas population migration from

implemented, corresponding to the agriculture

towns to cities, from small cities to large cities,

subsidizing industry policy and catching‑up

from the average countryside to the suburbs

strategy, the rural population must provide

also needed to be moderately controlled. Other

food to the cities at low planned prices,

than the Hukou system and the matching

meanwhile, the supply of consumption goods

planned purchase and marketing program

was also restricted by all sorts of coupon(tong gou tong xiao), the people s commune

quotas in the cities, most important of which isfurther extended the state s power to thethe so‑called

countryside,grain and oil rationing

enforcingorganized

rigorousregistration (Liangyou Guanxi). People must

control over rural society, completely tying

change their grain and oil rationing registrationpeasants to their land.

when changing their Hukou. In cities, other

With the rapid development of townshipthan maintaining employment relations withenterprises in the 1980s, the nonagricultural

employees, firms provided healthcare, housing,proportion

pensions and all sorts of other welfare. Due tocorrespondingly, and the government began tothe different welfare provided by firms ofadvocate peasantsdifferent

betweennot the homeland, entering the factories but

different firms in cities became highly difficult.

not the cities , and policies for peasantsRuralnature,labormobilityoftheruraleconomy

rose

leaving the farmland but

anentering the cities, especially small cities andoverwhelming majority of the population wastowns, were relaxed. The small city and town

even more completely excluded from such a

Hukou system reform beginning in 1984

welfare and safety net system. Due to theallowed peasants that work, do business or

populationthataccountedfor

Urban‑rural Divide and Its Implication to Intersectoral Resource Flows in China

４９As large numbers of migrant workers

engage in services bring their own food andsettle their Hukou in market towns. Entering

entered cities, urban‑rural segmentation began

the 1990s, after experiencing three consecutive

to be reflected in the labor market. We haveyears in which grain was hard to sell, thepreviously discussed this. Since nonlocals don t

government began to allow peasants to bringhave local Hukou, they are disadvantaged intheir own food and enter the city to do

income, employment opportunities, profe-ssion,business and work. Around 1993, every region

type of work etc. Such segmentation in thenationwide successively discontinued use oflabor market may also take the form of local

grain coupons, and the barriers to peasantsregulations. Early migrant workers that enteredentering the cities were further cleared.

the city were strictly managed by urban

Thereafter, we see progressively larger waves

departments. If they did not have a temporaryof migrant workers every year. But we should

residence permit, they were likely to bealso note that allowing migrant workers todetained and deported by the urban adminis-enter cities was also in the cities interests.

trative departments. Some big cities explicitly

Since the 1990s, China s urban economy andcollected nonlocal population admini-stration

manufacturing

which

fees from employers that hired migrantaccordingly required large amounts of labor.

developed

rapidly

workers, and such fees were used to support

Yet most urban locals are unwilling to engage

the local social security funds. Obviously, thisin certain types of work, at least they ask for ais

higher price, so migrant workers filled thisgovernments formulate urban‑rural policies

gap. In fact, we can indeed see that manyout of the interests of the urban locals. In

construction and factory workers at theJanuary 2003, the State Council promulgatedconstruction site or production line arethemigrant workers from the countryside. The

Management of and Services for Urban

development of services such as restaurants

Employment of Migrant Workers , requiringalso attracted large amounts of migrant

eachworkers.

unreasonable restrictions on migrant employ-However, after migrant workers enter theanotherpiece

Notification

regiontoofevidence

onthatCorrectly

cleanoutandcity

Handling

removement. Subsequently, each region introduced

cities and become employed, the geographicalrelevant

urban‑rural segmentation still hasn t fully

removal of administrative approval of migrant

disappeared. First, as aforementioned, theworker employment by all types of firms,

laws

andregulations,requiringvillage within city is a distinct manifestation

removal of restrictions on types of migrantof the spatial urban‑rural dual segmentation inworker employment, removal of all approval

cities under the current differing urban andand registration programs specifically designed

rural land systems. Second, due to the choice infor migrant workers. Of course, as aforemen-

residential location, nonlocals tend to choosetioned, income discrimination based on Hukou

communities with a high ratio of nonlocals,

still exists. Though visible discrimi-nation onwhich forms a certain degree of residential

the labor market disappears easily, invisible

segmentation, another manifestation of geogra-

discrimination may continue to exist for a longphical urban‑rural segmentation in cities

time.

(Chen, Lu, and Chen, 2012).

Urban‑rural segmentation is also reflected

５０

中国経済研究第１２巻第１号

in the connection between Hukou and theusuallysame city but different program,

public services residents can enjoy. When

incompatible across regions , which is to say,migrant workers first entered the city, the city

the level of social security for nonlocals isdevelopment plans didn t take their housing,lower than urban locals, and more importantly

their children s education and social security

is the issue of incompatibility for social

needs into consideration at all when planningsecurity across regions. As of the writing offor the provision of urban public goods. In fact,

this chapter, if a migrant worker hasn t paida rather pervasive circumstance was theendowment insurance for 15 years in one area,

existence of institutional discrimination morethen when leaving that area, they cannot bringor less in each region towards migrantwith them the accumulated funds paid by theirworkers offspring education, maternity andemployers and can only bring the portion paidchild healthcare, social security etc. Publicby themselves. In the offspring education

schools in some areas still charge more

aspect, in recent years, governments in eachtemporary studying fees and donations fromregion have gradually provided basic education

migrant workers offspring of compulsory

for migrant worker offspring out of local fiscal

education age or simply push these children toexpenditures, but if they want to enter publicmarket‑oriented education institutions. Even

schools of high quality, nonlocals still face hugethough migrant workers often work in jobs

difficulties from the Hukou issue, and hencewith poor working conditions, much needed

may need to pay highersocial security such as work injury andpersonal connections.

donations or use

healthcare insurance only covers a minority of

Despite the above facts indeed creating

migrant workers. More importantly, due to thecertain barriers to nonlocals equally sharing inexistence of the Hukou system, they can turban local public services, the most criticalretire in the city. If the urban‑rural segmented

urban‑rural segmentation in public services isinstitutional arrangement isn t change, then inreflected in the issue of university entrance

the foreseeable future, after dedicating theirexamination (Gaokao). Differences in social

prime age to urban development, their retire-

security are, at most, some monetary losses,

ment will have no guarantees. Although afterand limited offspring school entrance opportu-

the introduction of Notification on Correctly

nities can often be remedied by money, but noHandling Management of and Services formatter how much money nonlocals have, even

Urban Employment of Migrant Workers in

if their children can go to the best local high2003, provisions such as

employment andschool, when it comes to Gaokao, studentssocial security for migrant workers should bewithout local Hukou have to return to whereequal with urban residents ,many forms

their Hukou is and participate in Gaokao there.

must be adopted to accept migrant workers

We know that each university gives local

children into local full‑time primary andstudents a larger admission quota, and China s

secondary schools, entrance conditions must

best universities are concentrated in large

be equal with local students began to appear

cities, especially in the Yangtze Delta, Pearlin some local laws and regulations, de facto

Delta, Beijing etc where nonlocals are rather

differences still exist. For example, in terms ofconcentrated, and these regions are exactly

social security, the actual circumstances are

the main destination for nonlocal migrantUrban‑rural Divide and Its Implication to Intersectoral Resource Flows in China

５１population. Nonlocals work, pay taxes andThis reflects that China is currently taking thesocial security fees, but their offspring must go

correct path towards political urban‑ruralback to the province where their Hukou is tointegration. Of course, the path in practice isparticipate in the Gaokao, making it hard forstill long. 1 After equal votes and rights arethem to enjoy the preferential treatment ofachieved, can representatives that truly repre-

easier admittance of local students to local

sent the interests of the numerous peasants beuniversities.

chosen? This is the first step towards

We see that the various manifestations offurtheringurban‑ruralurban‑rural segmentation are all disadvanta-

significant

isgeous to migrant workers, and the reality thus

representatives of the rural Hukous true

reflected is, compared with the urban popula-peasants, or are they urban residents whotion, they relatively lack a say in policy. This ishave resided for a long time in the cities? Can

theintegration.

secondstep:

areMorethepolitical urban‑rural segmentation or segmen-

they truly speak for migrant workers andtation in say over policy and is the mostpeasants? Under the current approach tofundamental reason that leads to a series ofelections, migrant workers can only vote forother forms of urban‑rural segmentation.

the people s representative where their Hukou

Research by Lipton (1977) states that there

is at. Representatives produced through such aexists a severe asymmetry in political negotia-process, unless they can rise to a rather hightion status and policy influence between urban

level, are otherwise unlikely to have a materialand rural residents, which is the result of theimpact on urban policy through participating

political structure in most developing countries,

and commenting on policy. An approach thatleading to the government often enacting

can better realize political or say in policy

policies with an urban bias.

urban‑rural integration would be for the urban

Under China s political system, a major

people s representative to be produced not bychannel through which the public influences

elections according to Hukou but according topolicy is the people s congress system of all

all permanent residents, enabling migrantlevels. However, in the people s congress

workers from other areas to exercise theirsystem, peasants are severely underrepresen-political power in the area they live and workted. Historically, it has been a long termin. Only such an approach can truly reflect thedifficulty for peasants and urban population tocity

haveresidents of the city.

equal votes and rights . The 1995

government

servingallpermanent

revised Election Law provisions that quotas

The urban‑rural divide in China at different

are distributed in accordance to the principle

stages has clear implication to ISRF. ISRF

that each rural representative represents 4through scissors prices mainly occurs in thetimes the number of people an urban representative does. The 17th National Party Congress
reportproposed

recommending

gradualimplementation of people s congress elections
with equal proportions between the urban andrural population . By 2010, thisequal votes

and rights transformation was finally realized.

───────────
１ Chen et al. (2013) prove that even for theinterest of urban people with local hukou, theurban government should provide equal accessto local public services for migrants without
local hukou, as long as the income gap between
these two groups of people will result into social
conflict with capital loss.

５２

中国経済研究stage of geographical segmentation during
planed economy. With an increasing number ofmigrant workers go to cities, the migrantworkers are discriminated in the labor market
due to the migration control with hukou
system (Chen and Lu, 2008). The urban public
services segmentation as well as segmentationin say over policy results into the fact thatrural people do not benefit from economic
reform equally compared with urban people.
One important example is insufficient compensation of land taking during fast speed ofurbanization, which means that urbanization istaking advantage of undervalued land cost.
References:Chen, Z., X. Liu and M. Lu (2013). Beyond
Lewis: Rural‑to‑Urban Migration with
Endogenous Policy Change. China Agricultural Economic Review 5 , pp. 213‑230.

第１２巻第１号

Chen, Z. and M. Lu (2008). From Segmentation
to Integration: Political Economies ofUrban‑rural Economic Growth and SocialHarmony. Economic Research Journal(in Chinese) 1, pp. 21‑32.
Chen, Z., M. Lu, and J. Chen (2012). Hukou
System and Residential Segregation: A
New Challenge to Urban Public Administration. Fudan Journal (in Chinese) 5, pp.
77‑86.
Ishikawa, S. (1967). Net Resource Flow
between Agriculture and Industry: The
Chinese Experience. Developing Economies 5, pp. 3‑49.
Lewis, W. A. (1954). Economic Developmentwith Unlimited Supplies of Labour.
Manchester School 22. pp. 139‑191.
Lipton, M. (1977). Why Poor People Stay Poor:
Urban Bias in World Development.
Cambridge, MA: Harvard University
Press.
(Fudan University)