Arabfields, Farah Benali, Economic Correspondent, China — For decades, China’s economic transformation was most visible in its cities. Towering factories, expanding highways and rapidly growing urban centres became symbols of a country moving from low-cost manufacturing to advanced industry and technology.

But another transformation has been taking place far from the skylines of Beijing, Shanghai and Shenzhen.

Across China’s vast countryside, villages have been connected to new roads, agricultural production has become increasingly mechanised, rural businesses have expanded and millions of households have gained access to services and infrastructure that were once concentrated in urban areas. The countryside is no longer being treated simply as a source of labour and food. It has become an important part of Beijing’s broader modernization strategy.

The change is particularly visible in household incomes. In the first half of 2026, disposable income for rural residents reached 12,699 yuan per person, an increase of 6.4% from a year earlier. In real terms, after adjusting for prices, rural incomes rose 5.5%, faster than the 3.4% real increase recorded for urban residents during the same period.

The figures underline a shift that has been building for years. In 2025, annual disposable income for rural residents reached 24,456 yuan, up 5.8% from the previous year. Since 2020, rural disposable income has increased by 42.8%, compared with a 28.9% increase for urban residents.

The gap has not disappeared, but it has narrowed. The ratio between urban and rural disposable income fell to 2.31 in 2025, compared with 2.56 in 2020.

For families living in rural provinces, those changes are not abstract economic statistics.

A farmer who once depended almost entirely on the harvest can now combine agricultural income with work in food processing, transport, tourism, online commerce or small manufacturing. In some villages, younger residents who might previously have moved permanently to a coastal city are finding opportunities closer to home.

That diversification is central to China’s new rural economic model.

Agriculture remains at its core, but the objective is increasingly to make farming more productive while building industries and services around it. Instead of simply selling grain, fruit, vegetables or livestock, local governments are encouraging processing, cold-chain logistics, tourism and other businesses capable of generating additional value.

The strategy reflects a practical problem facing the world’s second-largest economy. China needs to raise agricultural productivity and protect food supplies while also creating new sources of domestic demand.

The countryside offers both.

China produced a record 706.5 million tonnes of grain in 2024, according to official figures, demonstrating the scale of its agricultural sector. Yet the country remains dependent on imports for several important agricultural commodities. Modernizing farms, improving yields and expanding agricultural technology have therefore become closely linked to national food security.

By 2026, the modernization effort has moved beyond tractors and irrigation.

Digital technology, agricultural machinery, improved seeds, sensors, drones and data-based farming are increasingly being incorporated into production. The ambition is to allow fewer workers to produce more food, an increasingly important objective as China’s population ages and the number of people working in agriculture continues to decline.

The government is also putting more emphasis on financing.

In September, Beijing announced a new framework intended to expand investment in rural development and food security through a combination of government spending, bank lending, insurance, bonds and private capital. The plan is designed to support agricultural infrastructure, technology, industrial development and major grain-producing regions through 2030.

The change is significant because rural modernization requires more than public spending on roads and housing. Farms need machinery, storage facilities, financing and insurance. Rural companies need access to credit. Local governments need investment for water systems, logistics and public services.

By expanding the number of financing channels, Beijing is attempting to make rural development less dependent on annual government budgets.

That could become increasingly important as local authorities face financial pressures and China’s broader economy matures.

The countryside is also becoming part of China’s consumption story.

Rural households spent an average of 20,259 yuan per person in 2025, an increase of 5.1% from the previous year. Spending on household goods and services rose 9.2%, while expenditure on transportation and telecommunications increased 8.9%. Education, culture and recreation spending rose 8.3%.

Those numbers suggest that rural residents are gradually becoming a more important consumer market.

For companies, this creates an opportunity. A household with higher and more predictable income is more likely to buy a refrigerator, smartphone, vehicle, agricultural machine or home appliance. Better roads and digital connections also make it easier for businesses to sell products outside major cities.

E-commerce has accelerated that process.

A farmer in a remote county no longer necessarily depends on a nearby market to sell produce. Online platforms can connect producers with consumers hundreds or thousands of kilometres away, while improved logistics make it easier to move goods between villages and cities.

The result is a rural economy that is increasingly connected to national supply chains.

Tourism has added another layer. Villages with distinctive architecture, landscapes, food traditions and cultural heritage have been turned into destinations for domestic travellers. For some communities, the value of tourism lies less in large hotels than in restaurants, guesthouses, handicrafts and local services that create several income sources around a single destination.

This is particularly important for regions where traditional agriculture alone cannot generate sufficient income.

Yet China’s rural transformation is not without contradictions.

Higher average incomes do not mean that every household is prospering. Rural residents continue to earn substantially less than urban residents, while access to high-quality healthcare, education and employment can vary significantly between regions.

Population ageing is another challenge.

Many young Chinese have spent years moving from villages to cities in search of better-paid employment. Even as authorities encourage rural development, attracting young workers and entrepreneurs back to smaller communities remains difficult.

A modern village still needs more than a new road or a renovated public square. It needs schools, medical facilities, reliable internet, employment and a business environment capable of retaining younger generations.

This is where the next stage of China’s rural strategy could become more demanding.

The first phase of modernization concentrated heavily on infrastructure and poverty reduction. The next phase will have to demonstrate that rural economies can generate sustainable income without relying indefinitely on government support.

China’s experience with poverty reduction provides a strong foundation. Official data show that rural incomes increased at an average annual nominal rate of 7.4% between 2020 and 2025, compared with 5.2% for urban residents. Rural incomes also recorded stronger real growth during that period.

If the 2026 trend continues, the income gap could narrow further over the next several years. A simple continuation of the recent rural income growth rate would put average rural disposable income substantially above current levels by the end of the decade, although the actual outcome will depend on agricultural prices, employment, government investment and overall economic growth.

The more important question may be whether rural households can become a stronger engine of domestic consumption.

The potential is considerable. China still has hundreds of millions of people living outside its major urban centres, and even modest increases in household spending can create significant demand for goods and services.

That makes rural modernization an economic strategy as much as a social one.

For Beijing, the countryside offers another advantage. Investment in rural areas can support food security, employment, consumption and regional development at the same time. It can also help reduce pressure on China’s largest cities by creating more viable economic centres outside the traditional coastal corridors.

The approach is gradually changing the meaning of modernization itself.

For much of China’s economic rise, modernization was associated with leaving the countryside for the city. Today, the government is attempting something different, bringing elements of the modern economy back into rural areas.

A village connected to high-speed roads, digital commerce, modern agricultural equipment and advanced logistics may look very different from the rural China of a generation ago. But its transformation is not necessarily about turning villages into cities.

Instead, the objective is to make rural communities economically viable within a much more integrated national economy.

The success of that model will ultimately be measured not only by grain production or infrastructure investment, but by whether families can build stable livelihoods without having to leave their communities.

That is the next test for China’s rural modernization.

If current income trends are maintained and investment in agricultural technology, infrastructure and rural industries continues through 2030, the countryside could become a larger contributor to domestic consumption and a more productive part of China’s industrial supply chain.

The transformation that once seemed to belong almost entirely to China’s cities is therefore moving deeper into the countryside.

For millions of rural households, modernization is no longer simply something happening somewhere else. It is increasingly taking place at the farm, in the village shop, on the local road and inside the family home.