Income growth and inequality reduction through rural industrial integration: Evidence from small-scale farmers in China

To achieve China’s goal of alleviating poverty and achieving common prosperity, it is crucial to ensure sustained income growth for farmers—who represent 98.1 % of the nation’s agricultural households—by integrating small-scale farming with modern agriculture. However, small-scale farmers currently face multiple obstacles to income growth, including limited access to technology, small production scale, and high financing costs. Analyzing survey data from 12 Chinese provinces, we found that participating in the integration of primary, secondary, and tertiary industries in rural areas of China (rural industrial integration) can significantly promote income growth and alleviate income inequality among small-scale farmers. These effects are achieved through the diversification and stabilization of income sources, facilitated by three main mechanisms: reduced income risk, improved liquidity, and optimized land allocation. In terms of promoting income growth and reducing inequality, small-scale farmers’ involvement in agricultural product processing is more effective than their participation in leisure agriculture, rural tourism, and traditional agricultural production. The income-enhancing and inequality-alleviating effects of rural industrial integration are most pronounced among low-income and less-educated farmers, and these effects are amplified by the presence of e-commerce infrastructure, especially for agritourism. These findings provide valuable policy implications for advancing the integration of rural industries and achieving sustained and stable income growth for small-scale farmers in China.