HONG
KONG - Of all the many ironies and contradictions
in China today, surely the richest is this: the
peasant, once both the symbol and lifeblood of the
communist revolution, has now become Beijing's
greatest source of fear. While Chinese urbanites
bathe in the frothy materialism of the country's
economic prosperity, much of the countryside
seethes with discontent over the uneven
distribution of this garish, newfound wealth.
And the bad news for China's new
leadership team, unveiled earlier this month at
the close of the Chinese Communist Party's
17th
National Congress, is that most of the country's
1.3 billion people still live in rural areas, many
in dire poverty. The challenge is to narrow this
urban-rural wealth gap or otherwise court social
unrest that could threaten the "harmonious
society" about which President Hu Jintao has had
so much to say.
Given the latest report
from the National Bureau of Statistics (NBS), one
is tempted to advise the president and the eight
other members of China's newly elected coterie of
power - the Politburo Standing Committee - to wait
things out. The NBS figures show that, as the
rapid sweep of urbanization continues, the rural
population will not be a majority much longer.
Only 56% of the country's population
remains in the countryside, according to the NBS.
While that may seem a lot to outsiders, it
compares to 64% in 2001 and 74% in 1990. Given the
demographic trend - which is only accelerating as
more farmers flock to the cities in search of a
better income - Chinese leaders should soon be
able to breathe a sigh or relief, right?
Not so fast. There is still plenty to
worry about. Previous estimates of rural residents
included migrant workers, who spend more time in
city factories than they did on their farmland,
but the current NBS report does not. While this
seems fair enough statistically, in reality it is
misleading. Due to the antiquated and
discriminatory hukou identification system,
migrant workers - whom the NBS counted at 147
million in 2005 and whose numbers have no doubt
swollen considerably since then - do not benefit
from the social security net that protects other
urbanites because, in the Chinese system, they
remain registered in the countryside. So, whether
the central government designates them as urban or
rural, they are really neither, living in a kind
of economic and social purgatory that clearly has
potential for unrest.
Another irony of
contemporary China is that seemingly good news
about the country's juggernaut of an economy is
actually bad news. For example, the news of last
quarter's 11.5% surge in growth - coming on top of
an even larger 11.9% rise in the second quarter -
prompted a precipitous decline in stock markets
and a warning from none other than investment
wizard Warren Buffet to be wary of Chinese
equities.
China's economy is expanding at
a rate well beyond the official 8% growth target
for the year and is on pace to hit double digits
for the fifth consecutive year. At this pace, it
will be only a matter of weeks before China
overtakes Germany as the world's third-largest
economy.
The fear, of course, is that this
sizzling growth will lead to a meltdown that turns
the country's prolonged economic boom into a
costly bust. And it does not inspire confidence
that such red-hot expansion comes in the wake of a
host of cooling measures introduced by the
government, including five interest rate hikes
this year and eight rises in reserve requirements
for the nation's banks. With these measures in
place, equity prices nevertheless rose 269% in the
past 12 months - a bubble that surely must burst.
An anticipated sixth increase in borrowing costs
is what sent stocks plunging last week.
In
addition, inflation was running at 6.2% in
September - down slightly from August but still
well above the government target of 3%. Property
prices are up 9% and the cost of food - which cuts
especially deep for the poor - has jumped well
beyond that. Meat and poultry prices shot up
nearly 50% this past summer.
While all
this economic news should raise alarm across the
country, it is particularly hard on those living
in the countryside, where the average annual
income is 3,587 yuan (US$480). That compares to an
urban average above 10,000 yuan. And government
data show that the great urban-rural income divide
is only getting wider. Last year, urbanites earned
3.28 times as much as their rural counterparts,
according to the Ministry of Agriculture, a figure
that is up from 3.21 in 2004 and expected to
expand to 3.3 by this year's end. A glance at the
rest of the world reveals income divisions
comparable to China's in the poorest nations in
Africa.
That said, the ironies continue to
mount: as the urban-rural gulf widens, it is also
true that farmers have never had it better. Last
year, their average annual income rose 7.4%.
Moreover, the government scrapped taxes on
agriculture totaling $16 billion annually.
But everything is relative. True, the
livelihood of farmers is improving, but not enough
to assuage their resentment toward city dwellers,
whose wealth more than triples theirs. Indeed, a
Shanghai-based analyst who compiles a list of
China's wealthiest people says the richest Chinese
have seen their bank accounts double over the past
year. According to researcher Rupert Hoogewerf,
whose annual HuRun report compiles a list of
China's richest people, the average wealth of the
800 people on his list now stands at $562 million.
The list includes 106 billionaires, making
China second only to the US in that category, and
at the top sits 26-year-old Yang Huiyuan, whose
shares in her father's property empire Hoogewerf
is calculated to be worth $17.5 billion, making
her the richest woman in Asia. Forbes magazine
estimates Yang's wealth at $16.2 billion. Whatever
the case, any Chinese farmer would gladly accept
the difference before waking up from his
impossible dream. Add to the frustration
farmers feel about the wealth gap their anger over
illegal seizures of farmland for development and
their lack of legal redress for those land grabs
due to endemic corruption among local officials.
This noxious mix of graft and inequality explains
why so-called "mass incidents" - the government
euphemism for large protests that often turn into
riots - have become a daily occurrence in the
countryside.
And it is also why the
president pledged to narrow the wealth gap and
increase spending on woefully underfunded social
services in his address to the party congress. But
the congress was long on pledges and short on
specific proposals to deal with what could be the
new leadership's biggest challenge: calming the
angry countryside by bringing greater economic
equality to ordinary citizens.
As the
state-run China Daily said in an editorial, "It is
a battle we cannot afford to lose."
Kent Ewing is a teacher and
writer at Hong Kong International School. He can
be reached at kewing@hkis.edu.hk.
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