January 30, 2013 | 0 Comments

China Rural-Income Gains Aid Shift Toward Consumption

Chinese incomes in the countryside rose faster than city incomes for a 3rd straight year at 10.7% vs 9.6% for city dwellers. The lift was attributed to the benefits of rural workers migrating to the city and increased social safety nets:

Chinese incomes rose faster in the countryside than in cities for a third straight year in 2012 as migrant workers boosted their pay and the government strengthened the social safety net.

Rural per-capita net income advanced 10.7 percent, compared with 9.6 percent for urban dwellers, partly on the rise in migrant laborers and their wages, the National Bureau of Statistics said Jan. 18. Rural residents’ income from benefits payments rose 21.9 percent, almost double the urban pace, as the government boosted its budget for health-care handouts.

Rural spending power has been lifted by wages earned by peasants working in cities, underscoring the broader benefits of the urbanization drive championed by incoming Premier Li Keqiang. Spreading gains in consumption would help sustain a growth rebound and reduce the economy’s reliance on exports, which rose last year at less than half 2011’s pace.

“Rising rural incomes should definitely help boost consumption and aid rebalancing,” said Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong. “Growth will gear down a bit as rising labor costs diminish investment incentives, but such consumption-led expansion will be more sustainable.”

via China Rural-Income Gains Aid Shift Toward Consumption – Bloomberg.