When e‐commerce meets smallholders: Boosting incomes and widening gaps in rural China's anti‐poverty policy

Abstract

Lifting smallholder farmers out of poverty depends largely on boosting their agricultural operating incomes, a persistent challenge despite numerous efforts. This study evaluates the impact of China's “E‐Commerce into the Countryside” (ECC) program—the first and largest e‐commerce initiative in the developing world—on both the level and distribution of smallholders' farm earnings. Employing a quasi‐experimental design, we find that the ECC program significantly increases household per capita agricultural operating income. We show that this gain is driven by expanded market access through online sales, which facilitate income growth via three primary mechanisms: operational scale expansion, higher output prices, and a shift toward high‐value‐added crops. However, these benefits are unevenly distributed. The program also widens the income gap among smallholders, a disparity largely attributable to pre‐existing differences in human, productive, and digital capital. Our findings highlight that e‐commerce policies, while potent for income generation, require complementary measures to mitigate disparities that arise from heterogeneous initial endowments.