Abstract
In China, the inequalities generated by the reforms in the last two decades have been increasing. As a result, the unequal regional and sectoral impact of development associated with the growth-maximisation strategy, has given rise to increasingly severe social and economic tensions and contradictions. The threats to political stability posed by these developments remain, for the time being, potential more than real. But the damage which they have caused to the social, economic and environmental fabric of China is already evident. The main critical facts are: 1) the rise in urban unemployment, both de facto and concealed, that has accompanied the halting restructuring programme among state-owned enterprises (SOEs); 2) the massive reservoir of underemployment that affects at least 130 million farmers; 3) the absence of even basic social security provision for the sick, the unemployed and the old; and the highly differentiated access to education; 4) the pervasiveness of corruption and its destructive impact on the normative framework that usually regulates human economic and social behaviour, to the detriment of the social contract between state and individual.
Economic and social polarisation associated with China’s growth-maximisation strategy has become the single most important domestic issue facing the Chinese government. Emphasis by the Hun Jintao-Wen Jiabao administration on a new “people-centred” development strategy highlights the urgency of this problem. When added to the pressures of resource shortages and environmental degradation, the case in favour of shifting from growth-maximisation to sustainability appears to be unanswerable. These are the concerns that have prompted government leaders and officials to question China’s existing development strategy and to formulate a “scientific” concept of sustainable and “harmonious” development.
The most authoritative explanation of the new strategy was articulated by Hu Jintao in a speech he made in May 2004, which was subsequently republished in the Party’s leading theoretical journal (Qiushi). In it, Hu demanded a radical change in China’s growth model from one characterised by “high input, high consumption, high pollution, and low efficiency” to a new approach, based on “high science and technology contents, good economic benefit, low resource consumption, less environmental pollution, and full exploitation of human resource advantages.” This change in emphasis was designed to help resolve “prominent contradictions”, such as the excessive pace and scale of fixed-asset investment, which threatened not only to exacerbate resource shortages, but also to generate inflationary pressures attendant on excessive expansion of credit.
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The impact of China’s one child family policy is not in doubt, although it may have been exaggerated. In July 2004 a senior official of the National Population and Family Planning Commission revealed that China’s birth rate was 18‰–45% higher than the official National Bureau of Statistics (NBS) figure and acknowledged that most families contained more than one child. The official said that single-child families were the norm in cities, but in rural areas families more often contained two children—in ethnic minority regions, three. Interestingly, he interpreted the difference between urban and rural child-bearing behaviour as a natural consequence of the “diversified mechanism” inherent in China’s family planning policy since the early 1980s. It was even (he said) desirable, since strict implementation of the former ‘one child’ policy had threatened to increase rural families’ hardship, given the lack of social insurance protection in the countryside.
Estimating the extent of surplus agricultural labour in China is notoriously difficult. The figure of 130 million is a minimum; the true figure is likely to be in excess of 150 million.
12 provincial-level regions are embraced by the “open up the West” [xibu da kaifa] initiative: Tibet, Xinjiang, Ningxia, Inner Mongolia and Guangxi Zhuang Autonomous Regions; Chongqing; and Qinghai, Gansu, Shaanxi, Sichuan, Yunnan and Guizhou. Their massive physical scope underlines the variety of its natural and economic conditions. The identity of the region is best seen in terms of commonalities of economic backwardness and infrastructural weakness, and the concentration within it of China’s minority nationalities.
In 2004, ownership of colour TV sets, washing machines, refrigerators, bicycles, motorcycles and land telephones per 100 rural households in western China was 63, 26, 8, 74, 24 and 34, compared with national averages of 75, 37, 18, 118, 36 and 55.
In the West over 55% of agricultural gross-value output derives from crop farming. This would be even higher, but for the disproportionate role of animal husbandry in Inner Mongolia, Qinghai and Tibet.
This emotive phrase has been openly used by senior Chinese government officials. The anxiety its use expresses is readily understandable. One of the historical parameters which frame Chinese attitudes towards agriculture is the recurrence throughout Chinese history of resistance and revolt by peasants—predominantly grain farmers. Another more recent shaping influence and an integral part of the same mind-set of is the catastrophic famine of the late 1950s and early 1960s. From these perspectives, the use of the phrase—and the continuing currency of a slogan coined in the early 1960s (“agriculture is the foundation of the economy”)—is a code, designed to convey the message that ‘agriculture is the source of national catastrophe.’ By the same token, that great lesson of Chinese history—“without farming, there is no stability; without grain, there is chaos” [wunong, bu wen; wuliang zeluan]—conveys a very specific moral: that it is through the activities of farmers (above all, grain farmers) crop that the most acute sources of economic and social dislocation are most likely to emerge.
The list of charges is bewildering: cash payments in lieu of labour corvée; fees for building permits, marriage registration, veterinary services; enforced contributions to funds for non-farm development and infrastructural construction, as well as to non-productive expenditure made by cadres; fines for violation of family planning regulations ….
Three such belts have been identified in the West: they embrace the Euro–Asia Railroad (the ‘New Silk Road’), the upper reaches of the Yangzi River, and linkages between the principal urban centres of the southwest.
The World Bank and Asia Development Bank have both extended major loans in support of the ‘Go West’ strategy.
R. Ash, “China’s regional economies and the Asian region: building interdependent linkages” in David Shambaugh (ed.), Power Shift: China and Asia’s New Dynamics (Berkeley, Los Angeles and London, University of California Press, 2005), pp 96–131.
China’s border regions embrace Liaoning, Jilin, Heilongjiang, Inner Mongolia, Gansu, Xinjiang, Tibet, Yunnan and Guangxi. Their immediate cross-border trading counterparts include North Korea, Russia, the Mongolian Republic, Kazakhstan, Kyrgyzstan, Tajikistan, Afghanistan, Pakistan, India, Nepal, Sikkim, Bhutan, Myanmar, Thailand and Vietnam.
See Ash “China’s regional economies”. op.cit.
I.e., the USA, EU, Hong Kong, Japan, South Korea, Taiwan and ASEAN.
Interestingly too, an analysis of the composition of such trade reveals that the structure of Chinese cross-border exports has shifted markedly towards industrial manufactures.
In 1992 Cambodia, the Lao People’s Democratic Republic, Myanmar, Thailand, Vietnam and Yunnan provinces formed the Greater Mekong Subregion (GMS) as a new growth area, based on enhanced regional economic integration.
See People’s Daily (Renmin ribao [RMRB]) website, 18 Apr. 2005.
Note too that recent months have seen considerable emphasis placed on the need to revitalise Northeast China (e.g., see RMRB website, 11 Apr. 2005).
For reasons of space, this section does not address critical dimensions of China’s employment problems. E.g., no consideration is given to the employment bias against women (the latest survey of women’s social status indicates while women accounted for 38% of total employees, they constituted 56% of all laid-off and unemployed urban workers; about half of these claimed to have encountered gender discrimination in their efforts to seek new jobs). Nor do I address youth unemployment (the rate of unemployment among workers between 16 and 24 is more than twice as high as the national average, and almost one-third of all registered unemployed in cities are school leavers who have no previous work experience). Important questions of occupational safety and worker representation are also ignored.
I have tried elsewhere to calculate regional labour surpluses. My calculations suggest that in 1996, 41% of all surplus labour in China was in western regions compared with only 27% in eastern coastal provinces. Inherent in this finding is the existence of a vicious circle facing western China. On the one hand, the burden it carries to find alternative employment for its surplus farm labour is significantly greater than in other parts of the country. On the other hand, the region’s inherent poverty makes the fulfilment of this task more difficult than elsewhere.
The 12 western provinces accounted for only 19.5% of national fixed investment—and little over 13%, if Sichuan and Chongqing are excluded.
The underlying implication is that incremental job creation associated with a 1% increase in GDP growth fell by almost a third during this period. The estimates of employment elasticity cited here and below are from MOLSS.
According to official Chinese source, urbanisation proceeded at a rate of 2% p.a. in recent years. In any case, there is evidence that the central government is readjusting its policies in order to accept and accomodate a slower rate urbanisation.
For reasons of space, I have to ignore the likely impact of WTO membership on agricultural and rural employment. Suffice to say that this is an extremely important issue.
Two-thirds of labour transferees were male, and about the same proportion were 35 years of age or younger. Transferees also tended to be better educated than those who remained in their original jobs.
In a recent book, Lester Brown observes that a loss of 0.4 ha. of land is associated with the addition of every 20 cars to China’s stock of cars. Thus, the 2 million cars sold in 2003 implied the loss of over 40,000 ha., much of which was likely to be arable land (Outgrowing the Earth: The Food Security Challenge in an Age of Falling Water Tables and Rising Temperatures, [London and Sterling VA: Earthscan, 2005], esp. pp 91–93).
That is, “governing the country for the people, using power for the sake of the people, having sentiments tied to the people, and pursuing the interests of the people”.
Such priorities were implicit in the economic goals laid down for 2004. One of the more interesting and novel of these was that future Treasury Bond issues should be used to promote rural development, social capital formation, environmental protection, ecological improvement, opening up the west and the rehabilitation of old industrial bases in northeastern China.
Shenzhen, Ningbo, Huzhou and Shaoxing have reported abolished “putting GDP in command” in judging the performance of their leading cadres. In other words, fulfilment of the GDP growth target will no longer be a major criterion by which they will judge the performance of their leading cadres.
17 May 2005.
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Ash, R. The long-term outlook for economic reform in China: resource constraints, inequalities and sustainability. AEJ 4, 177–196 (2006). https://doi.org/10.1007/s10308-006-0052-8
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DOI: https://doi.org/10.1007/s10308-006-0052-8