Standard of living in the People's Republic of China
Encyclopedia
Before 1949 the Chinese economy
was characterized by widespread poverty
, extreme income
inequalities, and endemic insecurity of livelihood
. By means of centralized economic planning, the People's Republic was able to redistribute national income so as to provide the entire population with at least the minimal necessities of life (except during the "three bad years" of 1959, 1960, and 1961) and to consistently allocate a relatively high proportion of national income to productive investment
. Equally important to the quality of life
were the results of mass public health
and sanitation
campaigns, which rid the country of most of the conditions that had bred epidemic
s and lingering disease
in the past. The most concrete evidence of improved living standards was that average national life expectancy
more than doubled, rising from around thirty-two years in 1949 to sixty-nine years in 1985. In addition, the percentage of the Chinese population estimated to be living in absolute poverty fell from between 200-270 million in 1978 to 100 million in 1985.
In 1987 the standard of living
in China was much lower than in the industrialized countries, but nearly all Chinese people had adequate food, clothing, and housing. In addition, there was a positive trend toward rapid improvements in living conditions in the 1980s as a result of the economic reforms, though improvements in the standard of living beyond the basic level came slowly.
Until the end of the 1970s, the fruits of economic growth were largely negated by population increases, which prevented significant advances in the per capita
availability of food, clothing, and housing beyond levels achieved in the 1950s.
The second major change in the standard of living came about as a result of the rapid expansion of productivity
and commerce
generated by the reform measures of the 1980s. After thirty years of austerity and marginal sufficiency, Chinese consumers suddenly were able to buy more than enough to eat from a growing variety of food items. Stylish clothing, modern furniture, and a wide array of electrical appliances also became part of the normal expectations of ordinary Chinese families.
Following the economic reforms introduced by the government in the late Seventies, consumption and individual incomes rose significantly, with the real per capita consumption of peasants rising at an annual rate of 6.7% from 1975 to 1986, while for urbanites over the same period, the corresponding figure was 5.5%. The improvements in the standard of living were demonstrated by a boom in rural and urban housing, together with a considerable increase in the ownership of televisions and other appliances.
output per capita grew from 288 kilograms a year in 1952 to 319 kilograms in 1978, an increase of only 11 percent in 26 years. In 1984, however, a remarkably good harvest
produced 396 kilograms of grain per capita, an increase of 24 percent in only 6 years. In 1985 grain output fell below the peak level of 1984, to 365 kilograms per person, and recovered only partially in 1986 to 369 kilograms per capita.
purchases were restricted by rationing. Cotton
cloth consumption was limited to between four and six meters a year per person in the 1970s. In the 1980s one of the most visible signs of the economic "revolution" was the appearance in Chinese cities of large quantities of relatively modern, varied, colorful clothes, a sharp contrast to the monotone image of blue and gray suits that typified Chinese dress
in earlier years. Cloth consumption increased from eight meters per person in 1978 to almost twelve meters in 1985, and rationing
was ended in the early 1980s. Production of synthetic fiber
s more than tripled during this period; in 1985 synthetics constituted 40 percent of the cloth purchased. Consumers also tripled their purchases of wool
en fabric
s in these years and bought growing numbers of garments made of silk
, leather
, or down
. In 1987 Chinese department store
s and street market
s carried clothing in a large variety of styles, colors, quality, and prices. Many people displayed their new affluence with relatively expensive and stylish clothes, while those with more modest tastes or meager incomes still could adequately outfit themselves at very low cost.
es, cooking pans, and clocks were stocked in department stores and other retail
outlets all over China from the 1950s on. Relatively expensive consumer durables became available more gradually. In the 1960s production and sales of bicycles, sewing machines, wristwatches, and transistor radios grew to the point that these items became common household possessions, followed in the late 1970s by television sets and cameras. In the 1980s supplies of furniture and electrical appliances increased along with family incomes. Household survey data indicated that by 1985 most urban families owned two bicycles, at least one sofa, a writing desk, a wardrobe, a sewing machine, an electric fan, a radio, and a television. Virtually all urban adults owned wristwatches, half of all families had washing machines, 10 percent had refrigerators, and over 18 percent owned color televisions. Rural households on average owned about half the number of consumer durables owned by urban dwellers. Most farm families had 1 bicycle, about half had a radio, 43 percent owned a sewing machine, 12 percent had a television set, and about half the rural adults owned wristwatches.
in towns and cities lagged behind urban population growth. A 1978 survey of housing conditions in 192 cities found that their combined population had increased by 83 percent between 1949 and 1978, but housing floor space had only grown by 46.7 percent. In 1978 there were only 3.6 sq m of living space per inhabitant in these cities, a reduction of 0.9 square meter since 1949. To remedy this problem, construction of modern urban housing became a top priority in the late 1970s, and by the mid-1980s new high-rise apartment blocks and the tall cranes used in their construction were ubiquitous features of large cities. Some apartments in the new buildings had their own lavatories, kitchens, and balconies, but others shared communal facilities. Nearly all were of much higher quality than older houses, many of which were built of mud bricks and lacked plumbing
.
By 1981 living space in urban housing had increased to 5.3 square meters per person, and by 1985 the figure was 6.7 square meters. Despite this progress, scarcity of housing continued to be a major problem in the cities, and many young married couples had to live with parents or make do with a single room.
Housing conditions in rural areas varied widely. During the 1960s and 1970s, thousands of production brigades built sturdy, sanitary houses and apartments and in many cases entire new villages. With the introduction of the responsibility system and the more than doubling of rural incomes in the early 1980s, another wave of housing construction took place as farm families moved quickly to invest in their major personal assets - their homes - which for the most part were privately owned. Many farm family houses lacked running water, but virtually all had electricity and were considerably more spacious than urban dwellings. In 1980 farm homes averaged 9.4 square meters of living space per person, and by 1985 the figure had risen to 14.7 square meters. Despite extensive construction of new housing, in poorer regions some farm families still lived in traditional dwellings, such as mud-brick and thatch houses or, in some regions, cave houses. Many of the nomad
ic herders in Inner Mongolia
, Xinjiang
, and Xizang (Tibet) autonomous regions still lived in tents or felt yurts. In the Yangtze River Valley and in south China, some fishing and boat transportation communities continued to live on their vessels.
differences in China since the 1950s have been much smaller than in most other countries. There was never any attempt, however, at complete equalization, and a wide range of income levels remained. Income differences grew even wider in the 1980s as the economic reform policies opened up new income opportunities. More than two-thirds of all urban workers were employed in state-owned units, which used an eight-grade wage
system. The pay for each grade differed from one industry to another, but generally workers in the most senior grades earned about three times as much as beginning workers, senior managers could earn half again as much as senior workers, and engineers could earn twice as much as senior workers. In 1985 the average annual income of people employed in state-owned units was ¥1,213. An important component of workers' pay was made up of bonuses and subsidies. In 1985 bonuses contributed 13 percent of the incomes of workers in state-owned units; subsidies for transportation, food, and clothing added another 15 percent. One of the most important subsidies - one that did not appear in the income figures - was for housing, nearly all of which was owned and allocated by the work unit
and rented to unit members at prices well below real value. In 1985 urban consumers spent just over 1 percent of their incomes on housing.
The Chinese Customer Report 2010 states three groups of spending tiers of income: big spenders (which spend 21% of the income), medium spenders (which spend 36% of the income) and small spenders (which spend 43% of the income).
The 27 percent of the urban labor force that was employed in collectively owned enterprises earned less on average than workers in state-owned units. The income of workers in collectively owned enterprises consisted of a share of the profit earned by the enterprise. Most such enterprises were small, had little capital
, and did not earn large profits
. Many were engaged in traditional services, handicrafts, or small-scale, part-time assembly work. In 1985 workers in urban collective units earned an average annual income of ¥968. In the more open commercial environment of the 1980s, a small but significant number of people earned incomes much larger than those in regular state-owned and collectively owned units. Employees of enterprises run by overseas Chinese
, for instance, earned an average of ¥2,437 in 1985, over twice the average income of workers in state-owned units.
The small but dynamic domestic private sector
also produced some lucrative opportunities. Private, part-time schools, which appeared in large numbers in the mid-1980s, offered moonlighting work to university professors, who could double or triple their modest incomes if they were from prestigious institutions and taught desirable subjects, such as English
, Japanese
, or electronics
. Small-scale entrepreneurs could earn considerably more in the free markets than the average income. Business people who served as a liaison between foreign firms and the domestic economy could earn incomes many times higher than those of the best-paid employees of state-owned units. A handful of millionaire
businessmen could be found in the biggest cities. These people had owned firms before 1949, cooperated with the government in the 1950s in return for stock in their firms, and then lost their incomes in the political turmoil of the Cultural Revolution
. In the late 1970s and early 1980s, when these businessmen were politically rehabilitated, their incomes were returned with the accrued interest, and some suddenly found themselves quite wealthy. Although the number of people earning incomes far beyond the normal wage scale was tiny relative to the population, they were important symbols of the rewards of economic reform and received a great deal of media attention. In 1985 most of these people worked in enterprises classified as "units of other ownership" (private rather than state- or collectively owned enterprises). These enterprises employed only 440,000 people out of the total urban labor force of 128 million in 1985 and paid average annual salaries of ¥1,373, only slightly higher than the overall urban national average.
In China, as in other countries, an important determinant of the affluence of a household was the dependency ratio
- the number of nonworkers supported by each worker. In 1985 the average cost of living for one person in urban areas was ¥732 a year, and the average state enterprise worker, even with food allowance and other benefits added to the basic wage, had difficulty supporting one other person. Two average wage earners, however, could easily support one dependent. Families with several workers and few or no dependents had substantial surplus earnings
, which they saved or used to buy nonessential goods. An important positive influence on the per capita consumption
levels of urban families was a decline in the number of dependents per urban worker, from 2.4 in 1964 to 0.7 in 1985. In farm families the dependency ratio fell from 1.5 in 1978 to 0.7 in 1985. Farm incomes rose rapidly in the 1980s under the stimulus of the responsibility system but on average remained considerably lower than urban incomes. Household surveys found that in 1985 average net per capita income for rural residents was ¥398, less than half the average per capita urban income, which was ¥821. The value of goods farmers produced and consumed themselves accounted for 31 percent of rural income in 1985. The largest component of income in kind was food, 58 percent of which was self-produced.
Farm family members on average consumed much less of most major kinds of goods than urban residents. For instance, a household survey found in 1985 that the average urban dweller consumed 148 kilograms of vegetable
s, 20 kilograms of meat
, 2.6 kilograms of sugar
, and 8 kilograms of liquor. At the same time, a survey of rural households found that the average rural resident consumed 131 kilograms of vegetables, 11 kilograms of meat, 1.5 kilograms of sugar, and 4 kilograms of liquor. Differences of a similar nature existed for consumer durables.
Another indication of the gap between urban and rural income levels was the difference in personal savings accounts, which in 1985 averaged ¥277 per capita for urban residents but only ¥85 per capita for the rural population. There was great variation in rural income levels among different provincial-level units, counties, towns, villages, and individual families. While the average net per capita income for rural residents in 1985 was ¥398, provincial-level averages ranged from a high of ¥805 for farm families living in Shanghai
to a low of ¥255 for the rural population of Gansu
Province.
The fundamental influence on rural prosperity was geography. Soil type and quality, rainfall, temperature range, drainage, and availability of water determined the kinds and quantities of crops that could be grown. Equally important geographic factors were access to transportation routes and proximity to urban areas.
The highest agricultural incomes were earned by suburban units that were able to sell produce and sideline products in the nearby cities. Under the responsibility system, household incomes depended on the number of workers in each household and the household's success in holding down production costs and in supplying goods and services to local markets. Most of the rural families with the highest incomes - the "10,000-yuan households" - were "specialized households" that concentrated family efforts on supplying a particular service or good. Many of these families owned their own equipment, such as trucks or specialized buildings, and operated essentially as private concerns. An increasingly important influence on rural incomes in the mid-1980s was the expansion of nonagricultural rural enterprises, often referred to as "township enterprises." These were factories, construction teams, and processing operations, most of which were owned by collectives, primarily villages, towns, and townships. Some were owned by voluntary groups of families. Township enterprises were considered by the government to be the main source of employment for rural workers who were leaving agriculture because of rising productivity under the responsibility system. By the end of 1986, township enterprises employed 21 percent of the rural labor force. The movement of rural labor into township enterprises helped to increase average rural incomes because of the higher productivity
in nonagricultural jobs. In 1986 industrial workers in rural areas produced an average annual value of ¥4,300 per person, compared with about ¥1,000 per farmer in the same year.
The change in farm production from primarily collective to primarily household operations is reflected in household survey data on the sources of rural incomes. Before the 1980s farmers received income in the form of shares of the profits earned by their production teams plus supplementary income from household sideline activities. In 1978 two-thirds of the net income of farm families came from the collective, and only 27 percent was derived from household production. With the shift to the responsibility system these ratios were reversed. By 1982 the collective provided only 21 percent of farm income, while household production provided 69 percent. In 1985 the collective share of farm income had fallen to just over 8 percent, and the family production share had risen to 81 percent.
Perhaps the most serious gaps in living standards between rural and urban areas were in education
and health care. Primary schools existed in most rural localities, and 80 percent of the country's primary-school teachers worked in rural schools. Secondary schools were less widely distributed; only 57 percent of the total number of secondary-school teachers served in rural schools. Most rural schools were less well equipped, and their staffs less adequately trained than their urban counterparts. Health care had been greatly improved in rural areas in the 1960s and 1970s through sanitation campaigns and the introduction of large numbers of barefoot doctors, midwives, and health workers. Most modern hospitals, fully trained doctors, and modern medical equipment, however, were located in urban areas and were not easily accessible to rural families. In 1985 two-thirds of all hospital beds and medical staff personnel were located in urban hospitals. The economic reforms affected rural education and health care positively in places where farm communities used their higher incomes to improve schools and hospitals and negatively in localities where the reduced role of the collective resulted in deterioration of collective services.
Economic history of China
China's economic system before the late-1990s, with state ownership of certain industries and central control over planning and the financial system, has enabled the government to mobilize whatever surplus was available and greatly increase the proportion of the national economic output devoted to...
was characterized by widespread poverty
Poverty
Poverty is the lack of a certain amount of material possessions or money. Absolute poverty or destitution is inability to afford basic human needs, which commonly includes clean and fresh water, nutrition, health care, education, clothing and shelter. About 1.7 billion people are estimated to live...
, extreme income
Income
Income is the consumption and savings opportunity gained by an entity within a specified time frame, which is generally expressed in monetary terms. However, for households and individuals, "income is the sum of all the wages, salaries, profits, interests payments, rents and other forms of earnings...
inequalities, and endemic insecurity of livelihood
Livelihood
A person's livelihood referers to "means of securing the necessities of life". For instance a fisherman's livelihood depends on the availability and accessibility of fish.- In social sciences :...
. By means of centralized economic planning, the People's Republic was able to redistribute national income so as to provide the entire population with at least the minimal necessities of life (except during the "three bad years" of 1959, 1960, and 1961) and to consistently allocate a relatively high proportion of national income to productive investment
Investment
Investment has different meanings in finance and economics. Finance investment is putting money into something with the expectation of gain, that upon thorough analysis, has a high degree of security for the principal amount, as well as security of return, within an expected period of time...
. Equally important to the quality of life
Quality of life
The term quality of life is used to evaluate the general well-being of individuals and societies. The term is used in a wide range of contexts, including the fields of international development, healthcare, and politics. Quality of life should not be confused with the concept of standard of...
were the results of mass public health
Public health
Public health is "the science and art of preventing disease, prolonging life and promoting health through the organized efforts and informed choices of society, organizations, public and private, communities and individuals" . It is concerned with threats to health based on population health...
and sanitation
Sanitation
Sanitation is the hygienic means of promoting health through prevention of human contact with the hazards of wastes. Hazards can be either physical, microbiological, biological or chemical agents of disease. Wastes that can cause health problems are human and animal feces, solid wastes, domestic...
campaigns, which rid the country of most of the conditions that had bred epidemic
Epidemic
In epidemiology, an epidemic , occurs when new cases of a certain disease, in a given human population, and during a given period, substantially exceed what is expected based on recent experience...
s and lingering disease
Disease
A disease is an abnormal condition affecting the body of an organism. It is often construed to be a medical condition associated with specific symptoms and signs. It may be caused by external factors, such as infectious disease, or it may be caused by internal dysfunctions, such as autoimmune...
in the past. The most concrete evidence of improved living standards was that average national life expectancy
Life expectancy
Life expectancy is the expected number of years of life remaining at a given age. It is denoted by ex, which means the average number of subsequent years of life for someone now aged x, according to a particular mortality experience...
more than doubled, rising from around thirty-two years in 1949 to sixty-nine years in 1985. In addition, the percentage of the Chinese population estimated to be living in absolute poverty fell from between 200-270 million in 1978 to 100 million in 1985.
In 1987 the standard of living
Standard of living
Standard of living is generally measured by standards such as real income per person and poverty rate. Other measures such as access and quality of health care, income growth inequality and educational standards are also used. Examples are access to certain goods , or measures of health such as...
in China was much lower than in the industrialized countries, but nearly all Chinese people had adequate food, clothing, and housing. In addition, there was a positive trend toward rapid improvements in living conditions in the 1980s as a result of the economic reforms, though improvements in the standard of living beyond the basic level came slowly.
Until the end of the 1970s, the fruits of economic growth were largely negated by population increases, which prevented significant advances in the per capita
Per capita
Per capita is a Latin prepositional phrase: per and capita . The phrase thus means "by heads" or "for each head", i.e. per individual or per person...
availability of food, clothing, and housing beyond levels achieved in the 1950s.
The second major change in the standard of living came about as a result of the rapid expansion of productivity
Productivity
Productivity is a measure of the efficiency of production. Productivity is a ratio of what is produced to what is required to produce it. Usually this ratio is in the form of an average, expressing the total output divided by the total input...
and commerce
Commerce
While business refers to the value-creating activities of an organization for profit, commerce means the whole system of an economy that constitutes an environment for business. The system includes legal, economic, political, social, cultural, and technological systems that are in operation in any...
generated by the reform measures of the 1980s. After thirty years of austerity and marginal sufficiency, Chinese consumers suddenly were able to buy more than enough to eat from a growing variety of food items. Stylish clothing, modern furniture, and a wide array of electrical appliances also became part of the normal expectations of ordinary Chinese families.
Following the economic reforms introduced by the government in the late Seventies, consumption and individual incomes rose significantly, with the real per capita consumption of peasants rising at an annual rate of 6.7% from 1975 to 1986, while for urbanites over the same period, the corresponding figure was 5.5%. The improvements in the standard of living were demonstrated by a boom in rural and urban housing, together with a considerable increase in the ownership of televisions and other appliances.
Food
While food production rose substantially after 1949, population increases were nearly as great until the 1980s. Production of grain, the source of about 75 percent of the calories in the Chinese diet, grew at an average rate of 2.7 percent a year between 1952 and 1979, while population growth averaged almost 2 percent a year. Total grainGRAIN
GRAIN is a small international non-profit organisation that works to support small farmers and social movements in their struggles for community-controlled and biodiversity-based food systems. Our support takes the form of independent research and analysis, networking at local, regional and...
output per capita grew from 288 kilograms a year in 1952 to 319 kilograms in 1978, an increase of only 11 percent in 26 years. In 1984, however, a remarkably good harvest
Harvest
Harvest is the process of gathering mature crops from the fields. Reaping is the cutting of grain or pulse for harvest, typically using a scythe, sickle, or reaper...
produced 396 kilograms of grain per capita, an increase of 24 percent in only 6 years. In 1985 grain output fell below the peak level of 1984, to 365 kilograms per person, and recovered only partially in 1986 to 369 kilograms per capita.
Clothing
Before the reform period, clothingClothing
Clothing refers to any covering for the human body that is worn. The wearing of clothing is exclusively a human characteristic and is a feature of nearly all human societies...
purchases were restricted by rationing. Cotton
Cotton
Cotton is a soft, fluffy staple fiber that grows in a boll, or protective capsule, around the seeds of cotton plants of the genus Gossypium. The fiber is almost pure cellulose. The botanical purpose of cotton fiber is to aid in seed dispersal....
cloth consumption was limited to between four and six meters a year per person in the 1970s. In the 1980s one of the most visible signs of the economic "revolution" was the appearance in Chinese cities of large quantities of relatively modern, varied, colorful clothes, a sharp contrast to the monotone image of blue and gray suits that typified Chinese dress
Chinese dress
Chinese dress may refer to:*Han Chinese clothing, the historical clothing of the Han Chinese people*Qipao, a body-hugging one-piece dress for women*Changpao, a body-hugging one-piece dress for men...
in earlier years. Cloth consumption increased from eight meters per person in 1978 to almost twelve meters in 1985, and rationing
Rationing
Rationing is the controlled distribution of scarce resources, goods, or services. Rationing controls the size of the ration, one's allotted portion of the resources being distributed on a particular day or at a particular time.- In economics :...
was ended in the early 1980s. Production of synthetic fiber
Synthetic fiber
Synthetic fibers are the result of extensive research by scientists to improve on naturally occurring animal and plant fibers. In general, synthetic fibers are created by forcing, usually through extrusion, fiber forming materials through holes into the air, forming a thread...
s more than tripled during this period; in 1985 synthetics constituted 40 percent of the cloth purchased. Consumers also tripled their purchases of wool
Wool
Wool is the textile fiber obtained from sheep and certain other animals, including cashmere from goats, mohair from goats, qiviut from muskoxen, vicuña, alpaca, camel from animals in the camel family, and angora from rabbits....
en fabric
Fabric
A fabric is a textile material, short for "textile fabric".Fabric may also refer to:*Fabric , the spatial and geometric configuration of elements within a rock*Fabric , a nightclub in London, England...
s in these years and bought growing numbers of garments made of silk
Silk
Silk is a natural protein fiber, some forms of which can be woven into textiles. The best-known type of silk is obtained from the cocoons of the larvae of the mulberry silkworm Bombyx mori reared in captivity...
, leather
Leather
Leather is a durable and flexible material created via the tanning of putrescible animal rawhide and skin, primarily cattlehide. It can be produced through different manufacturing processes, ranging from cottage industry to heavy industry.-Forms:...
, or down
Down
Down may refer to:* Relative direction, where down is the direction towards the centre of gravity of a celestial object.* Railroad directions, where down and up have locally significant meanings...
. In 1987 Chinese department store
Department store
A department store is a retail establishment which satisfies a wide range of the consumer's personal and residential durable goods product needs; and at the same time offering the consumer a choice of multiple merchandise lines, at variable price points, in all product categories...
s and street market
Street market
A street market is an outdoor market such as traditionally held in a market square or in a market town, and often held only on particular days of the week...
s carried clothing in a large variety of styles, colors, quality, and prices. Many people displayed their new affluence with relatively expensive and stylish clothes, while those with more modest tastes or meager incomes still could adequately outfit themselves at very low cost.
Consumer goods
As with food supplies and clothing, the availability of housewares went through several stages. Simple, inexpensive household items, like thermosThermos
Thermos may refer to:* A vacuum flask generically known as a "thermos"* a brand of domestic vacuum flask made by Thermos L.L.C.* Thermos , an ancient Greek city, the capital city of the Aetolian League...
es, cooking pans, and clocks were stocked in department stores and other retail
Retail
Retail consists of the sale of physical goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be...
outlets all over China from the 1950s on. Relatively expensive consumer durables became available more gradually. In the 1960s production and sales of bicycles, sewing machines, wristwatches, and transistor radios grew to the point that these items became common household possessions, followed in the late 1970s by television sets and cameras. In the 1980s supplies of furniture and electrical appliances increased along with family incomes. Household survey data indicated that by 1985 most urban families owned two bicycles, at least one sofa, a writing desk, a wardrobe, a sewing machine, an electric fan, a radio, and a television. Virtually all urban adults owned wristwatches, half of all families had washing machines, 10 percent had refrigerators, and over 18 percent owned color televisions. Rural households on average owned about half the number of consumer durables owned by urban dwellers. Most farm families had 1 bicycle, about half had a radio, 43 percent owned a sewing machine, 12 percent had a television set, and about half the rural adults owned wristwatches.
Housing
Housing constructionConstruction
In the fields of architecture and civil engineering, construction is a process that consists of the building or assembling of infrastructure. Far from being a single activity, large scale construction is a feat of human multitasking...
in towns and cities lagged behind urban population growth. A 1978 survey of housing conditions in 192 cities found that their combined population had increased by 83 percent between 1949 and 1978, but housing floor space had only grown by 46.7 percent. In 1978 there were only 3.6 sq m of living space per inhabitant in these cities, a reduction of 0.9 square meter since 1949. To remedy this problem, construction of modern urban housing became a top priority in the late 1970s, and by the mid-1980s new high-rise apartment blocks and the tall cranes used in their construction were ubiquitous features of large cities. Some apartments in the new buildings had their own lavatories, kitchens, and balconies, but others shared communal facilities. Nearly all were of much higher quality than older houses, many of which were built of mud bricks and lacked plumbing
Plumbing
Plumbing is the system of pipes and drains installed in a building for the distribution of potable drinking water and the removal of waterborne wastes, and the skilled trade of working with pipes, tubing and plumbing fixtures in such systems. A plumber is someone who installs or repairs piping...
.
By 1981 living space in urban housing had increased to 5.3 square meters per person, and by 1985 the figure was 6.7 square meters. Despite this progress, scarcity of housing continued to be a major problem in the cities, and many young married couples had to live with parents or make do with a single room.
Housing conditions in rural areas varied widely. During the 1960s and 1970s, thousands of production brigades built sturdy, sanitary houses and apartments and in many cases entire new villages. With the introduction of the responsibility system and the more than doubling of rural incomes in the early 1980s, another wave of housing construction took place as farm families moved quickly to invest in their major personal assets - their homes - which for the most part were privately owned. Many farm family houses lacked running water, but virtually all had electricity and were considerably more spacious than urban dwellings. In 1980 farm homes averaged 9.4 square meters of living space per person, and by 1985 the figure had risen to 14.7 square meters. Despite extensive construction of new housing, in poorer regions some farm families still lived in traditional dwellings, such as mud-brick and thatch houses or, in some regions, cave houses. Many of the nomad
Nomad
Nomadic people , commonly known as itinerants in modern-day contexts, are communities of people who move from one place to another, rather than settling permanently in one location. There are an estimated 30-40 million nomads in the world. Many cultures have traditionally been nomadic, but...
ic herders in Inner Mongolia
Inner Mongolia
Inner Mongolia is an autonomous region of the People's Republic of China, located in the northern region of the country. Inner Mongolia shares an international border with the countries of Mongolia and the Russian Federation...
, Xinjiang
Xinjiang
Xinjiang is an autonomous region of the People's Republic of China. It is the largest Chinese administrative division and spans over 1.6 million km2...
, and Xizang (Tibet) autonomous regions still lived in tents or felt yurts. In the Yangtze River Valley and in south China, some fishing and boat transportation communities continued to live on their vessels.
Income distribution
IncomeIncome
Income is the consumption and savings opportunity gained by an entity within a specified time frame, which is generally expressed in monetary terms. However, for households and individuals, "income is the sum of all the wages, salaries, profits, interests payments, rents and other forms of earnings...
differences in China since the 1950s have been much smaller than in most other countries. There was never any attempt, however, at complete equalization, and a wide range of income levels remained. Income differences grew even wider in the 1980s as the economic reform policies opened up new income opportunities. More than two-thirds of all urban workers were employed in state-owned units, which used an eight-grade wage
Wage
A wage is a compensation, usually financial, received by workers in exchange for their labor.Compensation in terms of wages is given to workers and compensation in terms of salary is given to employees...
system. The pay for each grade differed from one industry to another, but generally workers in the most senior grades earned about three times as much as beginning workers, senior managers could earn half again as much as senior workers, and engineers could earn twice as much as senior workers. In 1985 the average annual income of people employed in state-owned units was ¥1,213. An important component of workers' pay was made up of bonuses and subsidies. In 1985 bonuses contributed 13 percent of the incomes of workers in state-owned units; subsidies for transportation, food, and clothing added another 15 percent. One of the most important subsidies - one that did not appear in the income figures - was for housing, nearly all of which was owned and allocated by the work unit
Work unit
A work unit or danwei is the name given to a place of employment in the People's Republic of China. While the term danwei remains in use today it is more properly used to refer to a place of employment during the period when the Chinese economy was still more heavily socialist or when used in the...
and rented to unit members at prices well below real value. In 1985 urban consumers spent just over 1 percent of their incomes on housing.
The Chinese Customer Report 2010 states three groups of spending tiers of income: big spenders (which spend 21% of the income), medium spenders (which spend 36% of the income) and small spenders (which spend 43% of the income).
The 27 percent of the urban labor force that was employed in collectively owned enterprises earned less on average than workers in state-owned units. The income of workers in collectively owned enterprises consisted of a share of the profit earned by the enterprise. Most such enterprises were small, had little capital
Capital (economics)
In economics, capital, capital goods, or real capital refers to already-produced durable goods used in production of goods or services. The capital goods are not significantly consumed, though they may depreciate in the production process...
, and did not earn large profits
Profit (economics)
In economics, the term profit has two related but distinct meanings. Normal profit represents the total opportunity costs of a venture to an entrepreneur or investor, whilst economic profit In economics, the term profit has two related but distinct meanings. Normal profit represents the total...
. Many were engaged in traditional services, handicrafts, or small-scale, part-time assembly work. In 1985 workers in urban collective units earned an average annual income of ¥968. In the more open commercial environment of the 1980s, a small but significant number of people earned incomes much larger than those in regular state-owned and collectively owned units. Employees of enterprises run by overseas Chinese
Overseas Chinese
Overseas Chinese are people of Chinese birth or descent who live outside the Greater China Area . People of partial Chinese ancestry living outside the Greater China Area may also consider themselves Overseas Chinese....
, for instance, earned an average of ¥2,437 in 1985, over twice the average income of workers in state-owned units.
The small but dynamic domestic private sector
Private sector
In economics, the private sector is that part of the economy, sometimes referred to as the citizen sector, which is run by private individuals or groups, usually as a means of enterprise for profit, and is not controlled by the state...
also produced some lucrative opportunities. Private, part-time schools, which appeared in large numbers in the mid-1980s, offered moonlighting work to university professors, who could double or triple their modest incomes if they were from prestigious institutions and taught desirable subjects, such as English
English language
English is a West Germanic language that arose in the Anglo-Saxon kingdoms of England and spread into what was to become south-east Scotland under the influence of the Anglian medieval kingdom of Northumbria...
, Japanese
Japanese language
is a language spoken by over 130 million people in Japan and in Japanese emigrant communities. It is a member of the Japonic language family, which has a number of proposed relationships with other languages, none of which has gained wide acceptance among historical linguists .Japanese is an...
, or electronics
Electronics
Electronics is the branch of science, engineering and technology that deals with electrical circuits involving active electrical components such as vacuum tubes, transistors, diodes and integrated circuits, and associated passive interconnection technologies...
. Small-scale entrepreneurs could earn considerably more in the free markets than the average income. Business people who served as a liaison between foreign firms and the domestic economy could earn incomes many times higher than those of the best-paid employees of state-owned units. A handful of millionaire
Millionaire
A millionaire is an individual whose net worth or wealth is equal to or exceeds one million units of currency. It can also be a person who owns one million units of currency in a bank account or savings account...
businessmen could be found in the biggest cities. These people had owned firms before 1949, cooperated with the government in the 1950s in return for stock in their firms, and then lost their incomes in the political turmoil of the Cultural Revolution
Cultural Revolution
The Great Proletarian Cultural Revolution, commonly known as the Cultural Revolution , was a socio-political movement that took place in the People's Republic of China from 1966 through 1976...
. In the late 1970s and early 1980s, when these businessmen were politically rehabilitated, their incomes were returned with the accrued interest, and some suddenly found themselves quite wealthy. Although the number of people earning incomes far beyond the normal wage scale was tiny relative to the population, they were important symbols of the rewards of economic reform and received a great deal of media attention. In 1985 most of these people worked in enterprises classified as "units of other ownership" (private rather than state- or collectively owned enterprises). These enterprises employed only 440,000 people out of the total urban labor force of 128 million in 1985 and paid average annual salaries of ¥1,373, only slightly higher than the overall urban national average.
In China, as in other countries, an important determinant of the affluence of a household was the dependency ratio
Dependency ratio
In economics and geography the dependency ratio is an age-population ratio of those typically not in the labor force and those typically in the labor force...
- the number of nonworkers supported by each worker. In 1985 the average cost of living for one person in urban areas was ¥732 a year, and the average state enterprise worker, even with food allowance and other benefits added to the basic wage, had difficulty supporting one other person. Two average wage earners, however, could easily support one dependent. Families with several workers and few or no dependents had substantial surplus earnings
Earnings
Earnings are the net benefits of a Corporation's operation. Earnings is also the amount on which corporate tax is due. For an analysis of specific aspects of corporate operations several more specific terms are used as EBIT -- earnings before interest and taxes, EBITDA - earnings before...
, which they saved or used to buy nonessential goods. An important positive influence on the per capita consumption
Consumption (economics)
Consumption is a common concept in economics, and gives rise to derived concepts such as consumer debt. Generally, consumption is defined in part by comparison to production. But the precise definition can vary because different schools of economists define production quite differently...
levels of urban families was a decline in the number of dependents per urban worker, from 2.4 in 1964 to 0.7 in 1985. In farm families the dependency ratio fell from 1.5 in 1978 to 0.7 in 1985. Farm incomes rose rapidly in the 1980s under the stimulus of the responsibility system but on average remained considerably lower than urban incomes. Household surveys found that in 1985 average net per capita income for rural residents was ¥398, less than half the average per capita urban income, which was ¥821. The value of goods farmers produced and consumed themselves accounted for 31 percent of rural income in 1985. The largest component of income in kind was food, 58 percent of which was self-produced.
Farm family members on average consumed much less of most major kinds of goods than urban residents. For instance, a household survey found in 1985 that the average urban dweller consumed 148 kilograms of vegetable
Vegetable
The noun vegetable usually means an edible plant or part of a plant other than a sweet fruit or seed. This typically means the leaf, stem, or root of a plant....
s, 20 kilograms of meat
Meat
Meat is animal flesh that is used as food. Most often, this means the skeletal muscle and associated fat and other tissues, but it may also describe other edible tissues such as organs and offal...
, 2.6 kilograms of sugar
Sugar
Sugar is a class of edible crystalline carbohydrates, mainly sucrose, lactose, and fructose, characterized by a sweet flavor.Sucrose in its refined form primarily comes from sugar cane and sugar beet...
, and 8 kilograms of liquor. At the same time, a survey of rural households found that the average rural resident consumed 131 kilograms of vegetables, 11 kilograms of meat, 1.5 kilograms of sugar, and 4 kilograms of liquor. Differences of a similar nature existed for consumer durables.
Another indication of the gap between urban and rural income levels was the difference in personal savings accounts, which in 1985 averaged ¥277 per capita for urban residents but only ¥85 per capita for the rural population. There was great variation in rural income levels among different provincial-level units, counties, towns, villages, and individual families. While the average net per capita income for rural residents in 1985 was ¥398, provincial-level averages ranged from a high of ¥805 for farm families living in Shanghai
Shanghai
Shanghai is the largest city by population in China and the largest city proper in the world. It is one of the four province-level municipalities in the People's Republic of China, with a total population of over 23 million as of 2010...
to a low of ¥255 for the rural population of Gansu
Gansu
' is a province located in the northwest of the People's Republic of China.It lies between the Tibetan and Huangtu plateaus, and borders Mongolia, Inner Mongolia, and Ningxia to the north, Xinjiang and Qinghai to the west, Sichuan to the south, and Shaanxi to the east...
Province.
The fundamental influence on rural prosperity was geography. Soil type and quality, rainfall, temperature range, drainage, and availability of water determined the kinds and quantities of crops that could be grown. Equally important geographic factors were access to transportation routes and proximity to urban areas.
The highest agricultural incomes were earned by suburban units that were able to sell produce and sideline products in the nearby cities. Under the responsibility system, household incomes depended on the number of workers in each household and the household's success in holding down production costs and in supplying goods and services to local markets. Most of the rural families with the highest incomes - the "10,000-yuan households" - were "specialized households" that concentrated family efforts on supplying a particular service or good. Many of these families owned their own equipment, such as trucks or specialized buildings, and operated essentially as private concerns. An increasingly important influence on rural incomes in the mid-1980s was the expansion of nonagricultural rural enterprises, often referred to as "township enterprises." These were factories, construction teams, and processing operations, most of which were owned by collectives, primarily villages, towns, and townships. Some were owned by voluntary groups of families. Township enterprises were considered by the government to be the main source of employment for rural workers who were leaving agriculture because of rising productivity under the responsibility system. By the end of 1986, township enterprises employed 21 percent of the rural labor force. The movement of rural labor into township enterprises helped to increase average rural incomes because of the higher productivity
Productivity
Productivity is a measure of the efficiency of production. Productivity is a ratio of what is produced to what is required to produce it. Usually this ratio is in the form of an average, expressing the total output divided by the total input...
in nonagricultural jobs. In 1986 industrial workers in rural areas produced an average annual value of ¥4,300 per person, compared with about ¥1,000 per farmer in the same year.
The change in farm production from primarily collective to primarily household operations is reflected in household survey data on the sources of rural incomes. Before the 1980s farmers received income in the form of shares of the profits earned by their production teams plus supplementary income from household sideline activities. In 1978 two-thirds of the net income of farm families came from the collective, and only 27 percent was derived from household production. With the shift to the responsibility system these ratios were reversed. By 1982 the collective provided only 21 percent of farm income, while household production provided 69 percent. In 1985 the collective share of farm income had fallen to just over 8 percent, and the family production share had risen to 81 percent.
Perhaps the most serious gaps in living standards between rural and urban areas were in education
Education in the People's Republic of China
Education in the People's Republic of China is a state-run system of public education run by the Ministry of Education. All citizens must attend school for at least nine years. The government provides primary education for six years, starting at age six or seven, followed by six years of secondary...
and health care. Primary schools existed in most rural localities, and 80 percent of the country's primary-school teachers worked in rural schools. Secondary schools were less widely distributed; only 57 percent of the total number of secondary-school teachers served in rural schools. Most rural schools were less well equipped, and their staffs less adequately trained than their urban counterparts. Health care had been greatly improved in rural areas in the 1960s and 1970s through sanitation campaigns and the introduction of large numbers of barefoot doctors, midwives, and health workers. Most modern hospitals, fully trained doctors, and modern medical equipment, however, were located in urban areas and were not easily accessible to rural families. In 1985 two-thirds of all hospital beds and medical staff personnel were located in urban hospitals. The economic reforms affected rural education and health care positively in places where farm communities used their higher incomes to improve schools and hospitals and negatively in localities where the reduced role of the collective resulted in deterioration of collective services.
See also
- Economy of the People's Republic of ChinaEconomy of the People's Republic of ChinaThe People's Republic of China ranks since 2010 as the world's second largest economy after the United States. It has been the world's fastest-growing major economy, with consistent growth rates of around 10% over the past 30 years. China is also the largest exporter and second largest importer of...
- Economic history of the People's Republic of China
- Economic reform in the People's Republic of China