Research Of Rural Residents’ Income Gap And Fiscal Adjustment In China

With30years’development of reform and opening up, China’s residents’ living standards have improved significantly. According to the data of National Bureau of Statistics, by the end of2013, China’s GDP reached56.8845trillion Yuan (about$9.3trillion). The per capita net income of rural residents was8,896Yuan, with an actual growth rate of9.3%after deducting price factor,1.6%higher than real GDP growth rate. Therefore, it’s visible that China’s rural economy has developed rapidly; rural residents’income level has increased substantially. But the rural residents’income gap between rural internal, urban and rural areas, regions and provinces has presented the widening trend. The expansion of rural residents’income gap is bound to hinder the healthy development of the country’s economy. The central government has concerned about China’s agriculture issues in the form of "number one file" for11consecutive years from2003, aiming to promoting rural residents’income and narrowing the rural residents’income gap. Narrowing the China’s rural residents’income gap and promoting rural residents’ income is a big issue related to our people’s livelihood as well as an important factor to guarantee steady development of national economy.This paper is to adopt modern economics methods, combining with the actual situations of rural country, use extreme value index system, deviation from average, the gini coefficient, Theil index etc. to analyze the present situation of China’s rural residents’income gap. By using factor analysis and principal component analysis, it also put forward the corresponding countermeasures and suggestions. The paper is divided into the following five aspects.The first part is the introduction, researching background, purpose and significance. The background of this paper is that China’s rural residents’income gap is widening constantly, which causes serious effect on the construction of our country’s harmonious society and arouses the party and government’s high attention. The gini coefficient of rural residents’income gap rose from0.2770in 1984to0.3312in1997, to0.3897in2011. According to this trend, the gini coefficient of rural residents’income gap will be more than the international "red line"0.4, which results in the gap between the rich and poor in rural residents and hinders the rapid and healthy development of economy in our country. At the same time, the18th National Congress of the Communist Party of China put forward that solving "three agriculture" problems is the key work, and the central number one file in2014requires to further accelerate the modernization of agriculture. Then this article introduces the purpose of research. Firstly, through analyzing the basic situation of China’s rural residents’income, it measures the size of the rural gini coefficient at the present stage in China, the gap between urban and rural areas, the gap in rural internal, and the rural residents’gap between three regions. Secondly, it analyzes the influencing factors of rural residents’income though principal component analysis and factor analysis and other measurement models. Finally, it puts forward suggestions on narrowing the rural residents’income gap and implements the fiscal adjustment measures in view of the above influencing factors and problems. The significance of this paper is looking forward to narrowing the current rural residents’income gap and promoting farmers’income issues. Because whether the rural residents’income gap issue is resolved or not is not only related to the stability of the whole society and the sustained, rapid and healthy development of the entire national economy, but also has important significance on building a well-off society in an all-round way, building a harmonious socialist society and achieving common prosperity. Then the paper introduces the research idea and method. Finally, it reviews the literature at home and abroad. The domestic and foreign scholars use different data and different statistical methods and make large quantities of research conclusions from a different perspective, which provides us strong theoretical references and support. Foreign scholars tend more to use econometric model to analyze the China’ rural residents’income gap, but most of domestic researchers measure the eastern, central and western rural income gap between the three regions and do gini coefficient decomposition, usually based on the sources of income (family business income, salary income, property income and metastatic income).The second part introduces the relevant theories, measurement indicators and analysis methods of the income gap. It firstly defines the relevant concepts of the income gap. It defines the concepts of income (family per capita net income and per capita disposable income), income distribution, income gap and fiscal adjustment etc. Then, it introduces the Kuznets inverted U theory and regional and individual income gap theory. Finally, it introduces the measurement and analysis methods of the rural residents’income gap, including extreme value index system (differential extremism and extremism rate), deviation from average (deviation from average and Relative Average Deviation), the gini coefficient, Theil index, factor analysis and principal component analysis (PCA).The third part analyzes the present situation of rural residents’income gap of our country. First, it introduces the overall income gap situation of rural residents’ income. China’s rural per capita net income has risen from2,476Yuan in2002to7,917Yuan in2012, with an increase of5,443Yuan and an annual growth rate of19.9%. At the same time, the urban and rural residents’income gap is widening constantly. Rural per capita net income lags behind that in urban areas, and the income gap is huge. Then, it measures the rural residents’income gap. Based on the analysis of rural residents’income gap with extreme value index system, the results show that from2007to2002, the highest rural residents’income province of our country is Shanghai and the lowest income provinces are mainly western provinces, such as Tibet, Gansu and Guizhou. The extremism rate has only a little change for10years from2002to2012, decreasing from4.605to4.605, which shows that the relative income gap between rural residents tends to narrow as a whole. Based on the analysis of gini coefficient of rural residents’income gap, the results show that our country’s rural residents’income gap is in the rising trend in2001-2011. China’s gini coefficient of rural residents has reached0.3897in2011, approaching the international warning line of0.4. At last, it analyzes the decomposition of rural residents’income gap. One is based on the administrative divisions’decomposition of rural residents’income gap, the result of which shows that31provinces’(municipalities directly under the central government, autonomous regions) per capita net income gap between rural residents are obvious. The rural residents’incomes of Shanghai, Beijing, Tianjin and other cities which are located in eastern China is higher, those in Henan, Hunan, Hubei and other provinces and cities located in central China are at the middle level, and those in Gansu, Guizhou and other provinces and cities in western area are at the lowest level.Differences between provinces in the residents’income gap are larger, which have the contribution rate of77.6%in2012; the inter-provincial contribution differences are small and have only22.4%contribution rate. It shows that China’s rural residents’income gaps are mainly within-province. A trend of rise from0.0281in2008to0.0330in2011in three regional income gaps contributes little (only13.4%in2011) to the overall gap, and a slight downward trend from0.2198in2009to0.2140in2011contributes more, which has reached86.6%in2011. The second one is based on the decomposition of income source of rural residents’ income gap. The results show that the proportion of family business income is the largest, accounting for44.6%in2012, which is the first main source of farmers’ income, but it was in a downward trend from58.8%in2003to44.6%in2012; The proportion of wage income was just below the family business income in the rising stage, which is up from35%in2003to43.5%in2012; Metastatic income and property income belongs to non-agricultural income. Although the proportion of total revenue is less, the impact on the total revenue is more and more important, which has rising impact on rural residents’income gap in China. The third aspect is based on five slices packet decomposition of farmers’income gap, the income gap results show high-income households increase grows fastest, which has risen from5903Yuan in2002to19008.89Yuan in2012, with an increase of13105.89Yuan and an annual growth rate of120.18%. High and medium income families have the highest annual growth rate, whose incomes have risen from3031Yuan in2002to10142.08Yuan in2012, with an increase of7111.08Yuan and an annual growth rate of21.3%. High-income households’income is5903Yuan in2002and that of low-income households is857Yuan, high-income households’income is19008.89Yuan in2012and that of low-income households is2316.21Yuan. Therefore, high and low farmers’income ratio has increased from6.89times in2002to8.21times in2012and their incomes have been widening constantly. With the result that the rural residents’income gap presents an expansion trend.The fourth part analyzes the influence factors of rural residents’income gap in China. For one thing, it analyzes China’s rural residents’income gap based on the factor analysis. This paper argues that the differences of accepting education level and skill training, the differences of regional economic development in our country and the differences of industrial structure in rural areas are a major cause for expanding the China’s rural residents’income gap. For another, it analyzes China’s rural residents’ income gap based on Principal Component Analysis (PCA). This paper selects the per capita net income of rural residents as the dependent variable, selected rural arable area, total power of agricultural machinery, agriculture, forestry and fishing output value, agricultural prices index, population urbanization rate and the wage income of rural residents as the independent variable factors. Based on Principal Component Analysis and regression analysis, the number one impact on rural residents’ income is their wage income with the0.3051regression coefficient, and other orders from big to small are:total power of agricultural machinery (0.2055), population urbanization rate (0.2048), agriculture, forestry and fishing output value (0.2032), arable land in rural areas (0.175) and the producer price index of agricultural products (0.0244).The fifth part is research conclusion and suggestions. It put forward corresponding countermeasures and suggestions, aiming of the influence factors of rural residents’income gap in China. First of all, strengthen the construction of rural infrastructure and improve agricultural production condition’s’. Secondly, increase financial input to the rural science-education-culture-health and promote equal basic public services. Then, improve the agricultural subsidies policy and benefit compensation mechanism and increase the peasants’ income; expand financial investment and further establish and improve the rural social security system. Finally, establish rural areas’transfer payment system of the minimum financial guarantee.