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. She was born in 1939. Every summer and autumn she does packaging work at a local vegetable market. She never misses a chance to tell visitors that she makes over ¥10,000 ($1,450) a year. It would be tempting to dismiss such people as outliers but in the counties surrounding her hometown, which rank between 150th and 300th nationally in economic output — well above the rural median — Grandmother Ren (任奶奶) is fairly representative.

Field researchers in Guangdong found a similar picture. Another octogenarian explained why she was still growing vegetables: "The government subsidies are not enough. What can I say, children are not earning enough money, so I can't depend on them for support." She offered this as a statement of arithmetic. She had done the calculations and the obvious answer was to keep working. The arithmetic isn't complex. Since 2024, the national minimum basic pension for rural residents has risen by ¥20 ($3) per year: from ¥123 ($18) in 2024, to ¥143 ($21) in 2025, to ¥163 ($24) in 2026. Even with local top-ups from wealthier provinces, the average payout across the whole resident scheme came to only around ¥246 ($36) a month in 2024. More than 180 million elderly people depend on it, yet at the current pace of adjustment, ¥20 a year, getting from ¥163 to 1,000 would take roughly 42 years. At the 2026 Two Sessions the increment drew something unusual: open dissent from within the National People's Congress. Bi Lixia, chairwoman of a rice-planting cooperative in Jianli, 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. Lei Maoduan, a former village party secretary from Yuncheng in Shanxi, proposed lifting the basic pension for farmers over 70 to ¥500 within three years. Nine other delegates raised the issue. In the usually airless choreography of the Two Sessions, even this qualified pushback amounted to something close to a small revolt.

These were not radical demands. The rural dibao (低保) — the subsistence allowance below which the state formally acknowledges a person cannot sustain themselves — already sits higher than what most rural pensioners receive. What the delegates demanded was hardly generosity, just a pension worth its name. That such modest proposals required political courage to voice is telling. Rural pensions are not a peripheral issue in Chinese social policy. It is one of the central moral accounts of the post-1949 order, and one that has never been settled. To understand why, it's necessary to return to the mechanism by which China's industry was built. *** In the early 1950s, the government turned to agriculture as the primary source of capital for industrialisation — a sector that then generated nearly 60% of national income and employed more than 80% of the workforce. The instrument was the price scissors: state procurement prices for grain and other agricultural goods were held artificially low, while the prices of industrial goods sold back to the countryside were raised. A farmer selling grain at the state quota rate and buying fertiliser at the official retail price was, in every transaction, transferring value upward: from village to city, and consumption to accumulation. The scissors widened through the 1950s and 1960s, remained punishingly wide throughout the Cultural Revolution, and were only partially corrected after 1978.

The grain procurement system was the scissors' cutting edge. Quota targets were set by the state and were met regardless of harvest quality or local need. During the Great Leap Forward, when production statistics were falsified by cadres afraid to report failure, procurement continued at rates the real harvest could not sustain. Beijing, acting on inflated figures and still prioritising export earnings and debt repayment, remained a net grain exporter through 1960: about 4 million tons in 1959 and 3 million in 1960. Across the famine years 1958–1960, China exported a net 10 million tons of grain — enough to feed 17 to 39 million people for three years. The famine that followed killed somewhere between 15 and 55 million people, most of them rural.

But price scissors alone could not hold the system in place. The extraction it enabled depended on a second mechanism, one that anchored people. The hukou household registration system, established in 1958, divided the Chinese population into two legally distinct categories — agricultural and non-agricultural — and attached that status to birthplace, inheritable by descent. Its purpose was to keep agricultural labor in the countryside, preventing the wage arbitrage that would have followed if rural workers had been free to seek urban employment. Without controlled labor immobility, the price scissors could not function.

Those who did migrate without authorisation found themselves excluded from urban food rations, housing allocation, schooling, and the employment and welfare systems available to urban hukou holders. By the early 1980s, the capital-to-labor ratio in urban industry was more than 15 times that of agriculture.

What followed the communes was, in many respects, the price scissors in different form. In the late 1990s and early 2000s, as compound taxes and local levies pushed rural households toward breaking point, an obscure village party secretary in Anhui named Li Changping wrote a personal letter to Premier Zhu Rongji (the complaint observed that 农民真苦，农村真穷，农业真危险, or "the peasants suffer badly, the countryside is very poor, agriculture is truly in danger"). The letter reached Zhongnanhai and the agricultural tax was abolished in 2006. Yet its abolition relieved farmers of roughly ¥170 ($25) per household in direct burden. Against half a century of extraction: ¥170. Then came the land. The tax-sharing reform (1994) left local governments drastically short of revenue. The solution was to buy rural land from collectives at suppressed agricultural-use valuations and lease it to developers at market prices. Between 1990 and 2010, more than 40 million farmers were dispossessed of land through rural-to-urban conversion, receiving by most estimates no more than 10% of the price developers subsequently paid for the same parcels. The land-finance model might have underwritten urbanization but the bill was paid by those who had been living on the land. Using province-level data from 1949 to 1992, economists Lin and Yu found that in China's governmental objective function, investment was weighted far above consumption, and peasant welfare sat near the bottom of the ordering. This was not a temporary posture of an emergency economy but the preference of the developmental state across four decades. In brief, rural deprivation was one of modernization's key working conditions. The countryside did not merely fail to benefit from China's rise, on blueprints it was clearly destined to pay for it. With this in mind, the pension structure looks less like an incomplete welfare reform than the surviving ledger of that bargain. It preserves a social taxonomy that predated it — the hierarchy of cadre, urban worker and peasant that the Maoist state institutionalised and market reform reorganised. In Jiangxi, for example, retired government employees receive an average monthly pension of around ¥5,000 ($730), enterprise retirees around ¥2,300 ($335), and rural residents under the resident scheme around ¥200 ($30). Nationally, the average urban employee pension was roughly 16x the average resident-scheme payout in 2024 — about ¥3,740 ($545) a month against ¥246 ($36). This is what makes the pension gap feel, to many Chinese, less like a policy failure than a calculated snub. In their eyes it was a debt incurred plainly, in transactions whose logic everyone understood, and then simply ignored. Only retired officials can afford to acknowledge the pain. Xu Shanda, an ex-vice minister, for instance put it plainly in a 2022 lecture: all state-owned capital carries an implicit debt towards farmers. What, if anything, does the current pension actually do for the people who receive it? A 2025 Econometrica study of the New Rural Pension Scheme found that even at its inadequate level, the scheme reduced elderly rural labor supply by 34%, increased migrants' labor supply by 6%, and raised GDP by 2.4% and household welfare by 15%. The pension is not merely symbolic. It functions as a macroeconomic lever by altering migration decisions, reallocating labor, and enabling some portion of rural elderly to work a little less, a little later. But the emphasis belongs on some portion and a little. A different survey found that approximately 36% of China's population aged 60 and above — roughly 110 million people — were still engaged in paid work, with the burden falling heaviest in the countryside. In other words, the pension is too small to secure retirement at scale but large enough to alter behaviour at the margins. The state is paying enough to shift some labor toward the cities but not enough to confer something harder to manage than mobility: the discretion to stop working altogether.

The filial piety that is supposed to fill the remaining gap is now itself under pressure. The informal family settlement on which the system long relied is weakening. Multigenerational co-residence has thinned, migration has scattered adult children across provinces, and younger cohorts increasingly direct scarce resources downward to their own children rather than upward to ageing parents. Beijing has invested heavily in elderly care infrastructure, memory care facilities and health systems for the elderly, and it made the silver economy a national priority in 2024. But this only sharpens the pension argument: building memory care facilities in Chengdu and paying rural grandmothers ¥163 ($24) a month are not two expressions of the same impulse. One generates projects, contracts and measurable outputs. The other is a cash transfer with no production attached. The distinction illuminates exactly where (and why) the developmental state's generosity reliably stops. The language of “investing in people” has arrived faster than the budget line capable of proving it. Recent official rhetoric has leaned heavily on livelihoods, domestic demand and people-centred development, but the increments attached to that language remain underwhelming.

By late 2025, pressure from within the legislature had produced movement. 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 ($73) and ¥600 ($87) by 2035. Former deputy director Liu Shijin proposed tripling it using state-owned financial capital. Tsinghua's David Daokui Li described even ¥1,000 ($145) per month as "not that much" against the state-owned capital base — roughly twice the annual cost of reservoir construction, and a sum that would circulate rapidly back into consumption given rural households' high marginal propensity to spend.

None of this is fiscally implausible. By one widely cited projection, raising rural pensions to ¥800 ($116) a month would cost in the region of ¥1.7 trillion ($247 billion) annually by 2035, which would be less than 1% of projected GDP, and broadly comparable to what the state already spends each year on pensions for retired government employees alone. That is why the annual ¥20 increment matters so much. It reveals the pace at which the state is actually willing to move. A government may say that rural pensions are too low, and economists may say that the money exists, but at ¥20 a year the state is still answering the debt in instalments so small that many of its creditors will not live to see it repaid. And yet the increment remains ¥20 ($3) a year. We accept in principle that the pension is too low, it says, but this is what that acceptance looks like in practice. The reasoning behind the hesitation only becomes clear when it is asked what kind of spending rural cash pensions actually represent, and here a deeper explanation applies.

At the level of political economy, the answer is straightforward: the rural elderly have weak bargaining power. They have no organised labor presence, urban political weight, or strategic sector whose functioning depends on their goodwill. Yet the hesitation runs deeper than political economy alone. The developmental state has repeatedly shown discomfort with transfers that confer household autonomy. A subsidy for a refrigerator remains tethered to industrial policy and measurable demand. A trade-in voucher lands in a government spreadsheet as stimulus with a multiplier. Cash for an elderly farmer goes where the household decides — to pork or medicine, to a grandchild's fees, to a winter coat, to nothing in particular but the relief of having it. The Chinese state has spent 70 years building an economy through the managed direction of resources. What it has consistently found harder is handing money to a household and accepting that this unit can decide what matters. This is the limit the pension debate keeps finding. Not fiscal constraint as the urban employee fund surplus alone could sustain a substantial rural increase for years. Not ignorance as the economists and the evidence are well known in Beijing. Not indifference to ageing as such given all the initiatives surrounding it. The unresolved question is whether the developmental state is prepared to recognise, in cash form, a claim long acknowledged only in ceremonial language: that the countryside was constitutive to the making of modern China, and that the people who made it so are owed something in cash, without conditions attached, while they are still alive.