Analysis of Why Farmers' Income Growth Outpaced That of Urban Residents

The income gap between rural and urban residents continued to narrow in 2014. The latest data from the National Bureau of Statistics show that in 2014, the per capita disposable income of urban residents in China was 28,844 yuan, while the per capita disposable income of rural residents was 10,489 yuan, and the per capita disposable income ratio between urban and rural residents was 2.75, 0.06 lower than in 2013. Experts believe that with the continued growth of rural residents' income, China's income distribution structure will be further optimized.

Income gap narrows for consecutive years

Data show that in 2014, the per capita disposable income of residents nationwide was 20,167 yuan, a nominal increase of 10.1% over the previous year, or a real increase of 8.0% after deducting price factors. By place of usual residence, the per capita disposable income of urban residents increased by 9.0% over the previous year, or a real increase of 6.8% after deducting price factors; the per capita disposable income of rural residents increased by 11.2% over the previous year, or a real increase of 9.2% after deducting price factors. As of now, the growth rate of rural residents' income has exceeded that of urban residents for 5 consecutive years, and the urban-rural income gap has narrowed for consecutive years.

“The growth of farmers' income exceeding the growth of urban residents' income for 5 consecutive years is of landmark significance for coordinating urban and rural development.” Han Jun, deputy director of the Office of the Central Leading Group for Financial and Economic Affairs, said that this shows that a series of policies benefiting farmers from the Party Central Committee have brought enormous benefits to hundreds of millions of farmers. The “eleventh consecutive increase” in grain output and the “eleventh consecutive year of rapid growth” in farmers' income have played a vital role in ensuring the stability of the overall macroeconomic situation.

Income-boosting policies fully implemented

Against the backdrop of China's economy entering a new normal, the external environment and internal conditions for China's agricultural development have undergone significant changes, but the agricultural and rural economic situation has consistently shown a positive trend. In 2014, China's grain production achieved an “eleventh consecutive increase,” which undoubtedly laid the foundation for farmers' income growth.

“Making farmers' income growth always a priority in current income distribution, and a series of policies to strengthen farmers' income growth have been implemented more thoroughly than before - these factors have all made farmers' income grow faster than that of urban residents.” Su Hainan, vice president of the China Association for Labor Studies, analyzed to our reporter: First, the payment of migrant workers' wages has been implemented relatively well; second, agricultural production, especially for large-scale operators, has maintained relatively good momentum in terms of production, operations and income; third, income obtained from partial land transfers has significantly increased farmers' income; fourth, the construction of the rural social security system has advanced further than before, with more people covered by the new rural pension scheme and the new rural cooperative medical scheme, and with raised standards, while the rural minimum living guarantee system has also become more widespread, with more people covered; fifth, with the acceleration of urbanization, some farmers have become permanent urban residents, giving them more channels for increasing income than those in rural areas and correspondingly increasing their income.

“Rural residents' income mainly includes income from selling agricultural products, wage income, transfer income, property income, and so on.” Economist Song Qinghui told our reporter that as the government has increased transfer payments to farmers and taken multiple other measures, all four components of rural residents' income have increased.

Since last year, wage income has become the primary source of farmers' income, and the sustained substantial growth in migrant workers' wages in recent years is also an important reason for the increase in farmers' income. Han Jun said that last year farmers' income increased by about 900 yuan per capita, of which half came from the growth of wage income, household operating income increased by 300 yuan, and various transfer incomes including property income increased by 150 yuan.

Distribution structure still needs optimization

In fact, the growth rate of rural residents' income has been faster than that of urban residents for many consecutive years, which is of great significance for improving China's current urban-rural income gap and optimizing the income distribution structure.

“Adjusting the economic structure is to maintain steady economic development, and adjusting the income distribution structure is a key part of adjusting the economic structure.” In Song Qinghui's view, the role of adjusting and optimizing the income distribution structure is mainly reflected in using fiscal and tax policy levers to increase the proportion of residents' income in national income distribution, giving full play to the role of fiscal and tax policies and transfer payments, and deepening rural reform to increase farmers' property income, among other aspects. At present, the gap in property income between rural residents and urban residents is only a temporary phenomenon, indicating that China's income distribution reform has not been fully completed and that the income distribution structure still needs further optimization. It is still necessary to advance reform in the field of social security in accordance with the reform approach of “raising the low, expanding the middle and controlling the high.”

“Comprehensive measures should be taken to ensure the sustained increase of farmers' income.” Song Qinghui believes there are mainly 4 aspects to start with: first, raise agricultural labor productivity to increase farmers' operating income; second, continue to improve agricultural subsidy policies, raise the level of rural social security, and increase farmers' income; third, strengthen vocational skills training for farmers and promote specialized employment for farmers to increase their wage income; fourth, advance reform of the rural property rights system and accelerate multiple measures such as the shareholding cooperative system to promote sustained and rapid growth of farmers' income.