Restructuring of village collectives and the increasing income disparities in peri-urban China

This article examines how income disparities have emerged in urbanizing China despite the persistence of collective institutions. In the early 2000s, a shareholding reform in Guangzhou allocated nearly equal shares to eligible villagers, enabling them to receive dividends and welfare benefits. However, our recent investigation of 154 villages reveals that income disparities have increased rather than diminished under this reform. The findings indicate that villages where collective assets remain under the control of the Association of Shareholding Cooperatives (AoSC) at the village level experience significantly smaller income disparities compared to those where management authority has been decentralized to the level of shareholding cooperatives (SCs). The root cause of these disparities lies not in privatization or elite capture, but in changes to village structures and distribution principles. Therefore, reforms in income distribution should focus on who truly holds distributive power, rather than merely on formal titling. Moreover, maintaining villages at an appropriate scale and with autonomous governance capacity enables informal institutions to function effectively, which is crucial for ensuring equitable distribution and safeguarding the interests of villagers.