Regional inequalities in the transition to a market economy: The changing spatial distribution of income in China

This dissertation examines the spatial dynamics of individual and household income in post-Mao China, and analyzes the impact of institutional reforms on China's income distribution mechanisms. The most orientation of China's national development strategy in the direction of growth and efficiency has many researchers to expect widening regional inequalities in China. This dissertation argues that in reforming state socialist economies, the transition from redistributive to market coordination changes the locus of wage and income determination from the central government to urban enterprises and agricultural producers, and increases occupational mobility. The Chinese approach to market transition through the combination of market allocation and pricing with directive plans and administrative controls has resulted in the retention of some elements of state redistributive mechanisms and has led to a distinctive spatial pattern of income distribution.;The empirical analysis is conducted to evaluate the effectiveness of post-Mao regional development policies with regards to the stated objectives on the reduction in regional inequality of income distribution. Data on China's urban and rural individual and household income for the period 1978 to 1992 are presented, and regional inequality is examined with the use of a few selected inequality measures. This study finds that rapid increases in urban and rural income in China since 1978 have been accompanied by a widening in the inter- and intra-provincial differentials in per capita individual and household income. Some of the changes in the spatial distribution of income are consistent with the policy objectives of linking remuneration with individual productivity. Others reflect continued bureaucratic intervention into the processes of employment, wage and price determination. The absence of an effective framework of macroeconomic regulation creates strong tendencies for the diversion of wage income distribution outside the two-tier income distribution system. The direction of change in any given province is the result of the interplay of government policies, market mechanisms and institutional structure on processes of income distribution. Partial reforms create and structure spatial inequalities and have led to renewed conflicts and tensions over how the fruits of economic development should be distributed across provinces.