The Price of a Peasant

China’s rural pension is among the industrial world’s smallest. That is not an oversight but the residue of an industrial rise financed from the countryside.

There is an old woman in southern Shandong surnamed Ren, born in 1939, who does packaging work at a local vegetable market every summer and autumn and never misses a chance to tell visitors that she makes over ¥10,000 a year. You might be tempted to file her away as an outlier, but in the counties surrounding her hometown — which sit somewhere between 150th and 300th in national economic output, well above the rural median — she is more or less representative of how things actually are. In Guangdong, field researchers found much the same. An octogenarian there explained, without apparent bitterness, why she was still growing vegetables: the government subsidies weren't enough, her children weren't earning enough to help, so she kept going. She offered this as simple arithmetic, which it was.

The numbers aren't complicated. Since 2024, the national minimum basic pension for rural residents has risen by ¥20, about three dollars, each year: ¥123 in 2024, ¥143 in 2025, ¥163 this year. Even with top-ups from wealthier provinces, the average monthly payout across the whole resident scheme came to around ¥246 in 2024, and more than 180 million elderly people are relying on it. At ¥20 a year, getting from ¥163 to ¥1,000 would take roughly 42 years, which is to say that most of the people who need it will not be alive to receive it.

At the Two Sessions this year, the increment drew something unusual: open complaint from within the National People's Congress itself. Bi Lixia, who chairs a rice-planting cooperative in Hubei, told fellow delegates that a pension of little more than ¥100 a month was very difficult to live on, and proposed raising payments for rural residents over 70 to ¥400. A former village party secretary from Shanxi, Lei Maoduan, proposed lifting it to ¥500 within three years. Nine other delegates raised the issue. Given the usually choreographed quality of Two Sessions proceedings, this amounted to something — not quite a revolt, but at least a ripple of genuine feeling breaking through.

And these were not radical proposals. The rural dibao, the subsistence floor below which the state formally acknowledges a person cannot survive, already sits higher than what most rural pensioners actually receive. That delegates needed political courage to say even this tells you something about where rural pensions sit in the hierarchy of things Beijing considers pressing.

To understand why it sits there, it's necessary to look at the history. In the early 1950s, with industry generating less than a fifth of national income and agriculture employing more than four-fifths of the workforce, the government turned to the countryside as the primary source of capital for industrialisation. The mechanism was the price scissors: procurement prices for grain were held artificially low, prices of industrial goods sold back to rural areas were raised, and in every transaction a farmer made — selling grain, buying fertiliser — value moved upward, from village to city, from consumption into accumulation. This went on through the 1950s, through the 1960s, through the Cultural Revolution, and was only partially corrected after 1978.

The scissors had a cutting edge, which was the grain procurement system. Quota targets were set by the state and met regardless of what the harvest had actually produced. During the Great Leap Forward, when local cadres falsified production figures rather than report failure, procurement continued at rates the real harvest couldn't sustain. Beijing, working from the inflated numbers and still focused on export earnings and debt repayment, remained a net grain exporter through 1960 — about four million tons in 1959, three million in 1960. Over the famine years, China exported a net ten million tons of grain, enough to have fed somewhere between seventeen and thirty-nine million people for three years. The famine killed between fifteen and fifty-five million people, most of them in the countryside.

But the scissors required something else to function, which was that people stay where they were. The hukou system, established in 1958, divided the population into agricultural and non-agricultural categories and attached that status to birthplace, heritable by descent. Those who migrated without authorisation were excluded from urban food rations, housing, schooling, and the welfare systems that urban residents could access. Without controlled immobility, the price arbitrage that kept the whole system working would have collapsed. By the early 1980s, the capital-to-labor ratio in urban industry was more than fifteen times that in agriculture. The countryside had been held in place so that the cities could grow.

What followed the communes was, in important respects, the same logic rearranged. In the late 1990s, an obscure village party secretary in Anhui named Li Changping wrote a personal letter to Premier Zhu Rongji, observing that the peasants suffered badly, the countryside was very poor, and agriculture was truly in danger. The letter reached Zhongnanhai. The agricultural tax was eventually abolished in 2006, relieving farmers of roughly ¥170 per household. Against half a century of extraction, ¥170.

Then came the land. The 1994 tax-sharing reform left local governments short of revenue, and the solution they found was to buy rural land from collectives at suppressed agricultural valuations and sell it to developers at market prices. Between 1990 and 2010, more than forty million farmers lost land through rural-to-urban conversion, receiving by most estimates no more than ten percent of what developers subsequently paid for the same parcels. The land-finance model underwrote urbanisation, but the bill was settled by the people who had been living on the land.

Economists Lin and Yu, working from province-level data spanning 1949 to 1992, found that in China's governmental objective function, investment was weighted far above consumption and peasant welfare sat near the bottom. This was not a temporary wartime posture. It was the preference of the developmental state across four decades. The countryside wasn't simply left behind by China's rise; it was budgeted to pay for it.

Seen this way, the pension structure looks less like an incomplete welfare reform than a surviving ledger of that arrangement. In Jiangxi, retired government employees receive an average monthly pension of around ¥5,000, enterprise retirees around ¥2,300, and rural residents under the resident scheme around ¥200. Nationally, the average urban employee pension was roughly sixteen times the average resident-scheme payout in 2024. The hierarchy of cadre, urban worker, and peasant that the Maoist state institutionalised has been reorganised by market reform but not dissolved. Xu Shanda, a former vice minister, said as much in a 2022 lecture: all state-owned capital, he argued, carries an implicit debt towards farmers. It takes a retired official to say it plainly.

What does the pension actually do for the people who receive it? A 2025 Econometrica study found that even at its current inadequate level, the New Rural Pension Scheme reduced elderly rural labor supply by 34%, increased migrants' labor supply by 6%, raised GDP by 2.4% and household welfare by 15%. These are not trivial effects. The pension functions as a macroeconomic lever, shifting labor, altering migration decisions, allowing some portion of the rural elderly to work a little less, a little later in life. But the emphasis belongs on some and a little. Around 110 million people aged sixty and over — roughly 36% of that age group — were still in paid work, with the burden concentrated in rural areas. The pension is large enough to change behaviour at the margins but too small to actually allow people to stop.

The filial piety that was supposed to fill the gap is under pressure now too. Multigenerational households have thinned, migration has scattered adult children across provinces, and younger cohorts direct their scarce resources toward their own children rather than their parents. The informal settlement on which the system relied is fraying.

Beijing has meanwhile invested heavily in elderly care infrastructure: memory facilities, health systems, a whole silver economy designated a national priority in 2024. But this only sharpens the pension question. Building memory care facilities in Chengdu and paying rural grandmothers ¥163 a month are not two expressions of the same impulse. One generates projects, contracts, measurable outputs. The other is a cash transfer with no production attached. The developmental state has always found it easier to manage the first kind of generosity.

By late 2025, some movement was visible. The Central Financial and Economic Affairs Commission reaffirmed commitments to raise rural pensions in the 15th Five-Year Plan. Economists at CASS proposed doubling the minimum to between ¥500 and ¥600 by 2035. Former deputy director Liu Shijin proposed tripling it using state-owned financial capital. Tsinghua's David Daokui Li described even ¥1,000 a month as not that much against the state-owned capital base — roughly twice the annual cost of reservoir construction, he noted, and money that would circulate quickly back into consumption given how rural households tend to spend. One widely cited projection put the cost of raising rural pensions to ¥800 a month at around ¥1.7 trillion annually by 2035, less than one percent of projected GDP and broadly comparable to what the state already spends each year on pensions for retired government employees alone. The fiscal argument, by this point, is not really about money.

Which brings you back to the ¥20. The hesitation is not primarily about fiscal constraint, since the urban employee fund surplus alone could sustain a substantial rural increase for years. It is not about ignorance of the evidence, which is well known in Beijing. It is not even, really, about indifference to ageing as a problem. What the pension debate keeps finding, at its edge, is something more like an ideological discomfort with transfers that confer household autonomy. A refrigerator subsidy stays tethered to industrial policy. A trade-in voucher lands in a government spreadsheet as stimulus with a multiplier attached. Cash for an elderly farmer goes where the household decides: to medicine or pork or a grandchild's school fees or a winter coat or simply to the relief of having it. The Chinese state has spent seventy years building an economy through the managed direction of resources, and what it has consistently found harder is handing money to a household and accepting that the household can decide what matters.

The ¥20 is what that difficulty looks like in practice. The debt was incurred plainly, in transactions whose logic everyone understood at the time. The question now is whether the developmental state is prepared to recognise it in cash, without conditions, while its creditors are still alive.