Data in transition: Assessing rural living standards in southern China

The data underlying recent concerns about rising inequality and poverty in rural China have been questioned from a number of points of view. We review the issues, and attempt to resolve the main ones by reprocessing the primary data for four southern provinces over 1985-90. Our revisions suggest that the poorest are better off than was thought, that inequality is lower, and that poverty and inequality have increased less than the original data would suggest. The main reason for these changes is that the official data continued to rely on planning prices which undervalued non-marketed home production of grain, and at a rising rate over time. Otherwise the broad trends of recent concern to policy makers are confirmed: The period saw significant gains to the rural poor in the richer and more rapidly growing coastal region, but low growth and adverse distributional effects slowed progress in the poorer inland provinces.