Urbanisation will continue in China, with the government planning to grant urban residential status to an additional 100 million rural workers by 2020. While this process is transforming the urban economy, the rural economy is also undergoing substantial structural change. Government policy settings in rural areas are critical for smoothing the transition and helping bridge the gap in living standards between urban and rural China. Reforms should further enable farmers who wish to continue working in the agricultural sector to raise productivity levels. Specific measures include encouraging land transfer, promoting further rural financial development and technical assistance for farmers. At the same time, obstacles should be removed for those rural residents aspiring to move to jobs in cities where their skills can yield a higher marginal product. For those who remain in rural areas, improved social welfare systems and investment in health services are critical.
This Working Paper relates to the 2015 OECD Economic Survey of China www.oecd.org/eco/surveys/economic-survey-china.htm
