Published May 2012
Of social harmony & corruption
If extreme poverty in China is at a record low - thanks
to the impressive economic development of the country since the 1990s - social
tensions and mistrust in the government have never been that bad
since the riots of 1989. We're nowhere near a new Tian'anmen, but the 90,000 protests and the millions of middle class Chinese who leave the country every year underline this issue.
Yet the country has managed to lift some 200-300 million people out of poverty over the last 10-15 years, a feat that no other country has ever accomplished. But in recent years, new challenges have arisen: widespread corruption, huge inequalities and exploitation of workers to name but a few. The general feeling among the population is that the society has become more unfair and that a small group of people – often very close to the Chinese Communist Party (CCP) - is getting unbelievably richer than the rest of the population.
Is the Party losing control ?
Members of the CCP tend to be involved in some of
the biggest companies in the country and conversely, some of the largest
Chinese fortunes have a hand in the government’s affairs to protect their own
interests. Needless to say, the same goes of the US or the European Union for
that matter, but the Chinese government is being increasingly accused of having
completely lost touch with the needs of the population it claims to represent
(“The Party is the Chinese people”, they like to say).
Other environmental issues are also making life in China ever more intolerable:
You’ll then understand why there have never been as many Chinese families leaving the country (or trying to) in History. The middle class is often looking for any way out to offer their children a better environment to grow up in: education, nature & prospects for the future in a fairer society.
Every year poorer than we thought ?
Measuring poverty in China is quite the tricky exercise because of the huge disparities between the cost of living in cities and rural areas in such a gigantic country. With an extreme poverty level around 10%, that’s some 130m people affected by destitution and social exclusion. But the government hasn’t always been very fair play about this and it reluctantly had to increase its poverty line several times over the past 20 years - thus including millions more in the total poverty count.
In all fairness, this is a normal process when an economy is growing and changing so fast. All governments on this planet are tempted to hide numbers they aren’t very proud of. Raising the poverty line – which went from $200/year to £350/year in 2011 - is a very important move for the poor because it allows them to receive more government support (cash transfers, healthcare, housing etc). In 2008, the poverty line was so low ($100/year) that it had only 15m people officially living in poverty in China.
Cities vs. countryside
At the end of 2012 China became an urbanised country: its urban population (52%) is now larger than its rural one, for the first time in history. Still the problem remains that the other 48% suffers from a dual system that privileges cities for both social benefits (pension, healthcare, schools) and economic opportunities. The consequences for social stability and poverty in China are quite severe: tens of thousands of farmers are forced out of their land every year by private contractors for the sake of cities’ expansion and the wealth gap between urban and rural inhabitants has never been so big.
Of course, the central government is aware of that and has been trying a whole range of policies to provide better social assistance (e.g. there is almost no pension system whatsoever) and higher wages to rural China.
Those forgotten by economic growth
Poverty in China may be blatant in cities, but it’s in rural areas that the problem is most dire. In many villages, those who manage to sell everything they produce will only make about $1000/year. Earning that much means they don’t receive government support anymore and have to handle housing and other basic necessities on their own.
At the same time, the soil in China yield less and less crops (particularly in arid provinces) and it’s often only enough to feed oneself properly. So, most of the younger generation leaves their villages to work in nearby cities and send money back to their parents. That remains the most common pension system in China.
Inequalities between cities and rural areas keep growing and even between rural areas themselves. Some have closer ties to cities and are designated partners for food production thanks to their proximity and better infrastructure (e.g. better roads equals better supply chain). On the other side, the government has clearly failed many provinces and stopped maintaining basic infrastructures, to begin with roads. Lack of roads means fewer exchanges between villages and markets, and thus less income for these rural families. In such regions, inhabitants hardly make $200/year.
Every man and woman old enough to work are leaving their hometowns, creating a complex situation where villages are even more excluded and drained of their workforce. The government does sometimes offer to relocate families but doesn’t cover all the expenses and these families often aren’t able to bear the cost.
Schools & education
It’s no secret to the government that education is one of
the most powerful means to fight poverty in China and empower the population
with skills that will help them find jobs and make them more productive at
work. As the Chinese like to say, this is a “win-win situation” for both the
government and the people. Still, promoting compulsory primary education in
China, let alone higher education, has been one of the greatest challenges
Chinese leaders have had to face.
In the mid-1980s, they started a program to universalise a 9-year compulsory education system, for children from age 6 to 15. The success of this program has been key to reducing child labor and child poverty in China, by making it compulsory that everyone – from the state to communities and families – ensured kids did go to school for these nine years.
By adopting a region-based strategy, the Chinese government managed to reduce illiteracy among adults and tailoring programmes to the needs and requirements of the local populations. This was achieved by making provincial governments responsible and accountable for the success of the program in their respective regions all while providing training, conferences and regulation for funding and operational mechanisms. Evaluations and assessments also became a common tool. In only a few years the country adopted governance tools and systems on a scale usually seen in developed countries.
The challenges of quality education & funding
Despite a focus on quality of education in the past decade or so, it’s become obvious that the same problem plagues the school system: the urban/rural divide. How do you get quality teachers to move to remote villages when even schools in cities surrounding Shanghai can’t get hold of an English teacher that has actually been to an English-speaking country?
Ever more Chinese parents complain that they have to send their kids to a system that puts an insane amount of pressure on them (much like in Japan or South Korea) but yield too little results when it comes to future job prospects. Despite massive investments in teacher training and school premises and equipment in the 1990s, the issue of corruption and embezzlement of public funds by local officials has taken a severe toll on the quality of the teaching environment.
In remote provinces, schools are often poorly built or left in an advanced state of deterioration. Earthquakes in the Western provinces of China are great to uncover the extent of corruption: you can immediately see which buildings are and aren’t still standing. In 2008, a disproportionately high number of schools collapsed in the massive earthquake in Sichuan, revealing how sub-standard the buildings were for a region prone to quakes and landslides. The extent to which corruption impacts on poverty in China is undoubtedly widespread and all-pervasive.
The size of the country just makes it very hard to control what gets and doesn’t get done. But at least some of the money gets there in the shape of free textbooks, renovation projects and whatnot.
Boarding school room in China
The Chinese way and future challenges
If there is one way that can explain the Chinese economic miracle and some of their development success it’s by looking at the way they tackle a problem. Chinese diplomats have been consistently travelling around the world to look at how other countries and governments were dealing with similar issues. They would then go back home, analyse their findings and try to adapt the best suited solution to the Chinese context.
In this instance, they learned a great deal from western children learning assessments, including the use of private evaluation companies to examine the effects of education policies and spread the most successful ones across the country. All these efforts were then relayed in the mass media (easy task in China) by promoting the value of education, as opposed to having your children help you at work.
However by trying to make each province - and in particular each county - more responsible for the education of its children, the government also allowed itself to withdraw some of its funding all while requiring the same level of education for everyone. That obviously was a tough move for the poorest provinces, which were entirely dependent on that financial support. Hence, over the long run this contributed to worsen the wealth gap and prospects to reduce poverty in China.
Among the solutions that the government is trying:
The role of the hukou in regulating rural flight
Despite massive negative coverage in Western media, the hukou system – a passport that distinguishes between urban and rural inhabitants – has been the key to China’s successful transition to an urban society. It is unfair and discriminatory but it helped prevent the apparition of large-scale slums as seen at the doors of Latin American or in Indian cities. It’s one of the very rare cases of effectively managed rural flight (or rural exodus), the phenomenon that affected each and every developed country whereby farmers leave rural areas en masse to look for jobs in the city.
However, today it seems the hukou contributes more to exploitation, segregation and poverty in China than it yields positive outcomes. Needless to say, China’s economic boom is most appealing to the Chinese who see an opportunity to finally get out of poverty and even possibly get rich. To many rural dwellers getting to the big city is in itself a major step towards a better life.
Migrant workers: the cycle of discrimination and poverty
The appeal of cities has led some 250m people to leave the countryside and create a new social class of its own: the migrant workers. They are workers (often with their families) registered as rural in their hukou who have decided to work in cities. They haven’t been accepted or registered as urban and as such they lose their most basic rights under the Chinese constitution: healthcare, education and social security.
This creates situations that obviously contradict the universal compulsory education plan for instance. Even when you move to another city, your citizenship remains tied to your hometown which is in charge of providing you those basic services. That’s how poverty in China thrives in this new underclass, and yet remains greatly unaccounted for because these families do not officially live in the city.
Ironically the government sees urbanisation as the solution to the problem of inequalities and future growth, but doesn’t accept new settlers in so easily. In fact, it’s well aware of the problem but it’s quite complex because it involves a complete overhaul of the social security and legal system in China to allow for people to change their “sub-citizenship” from rural to urban. The main challenge is the transfer of responsibility from small towns to bigger ones and dealing with the discrimination and segregation from local urbanites who tend to associate migrant workers with crime and overpopulation.
A reform of the decades old hukou system is long overdue but keeps being pushed back because of the scale of the projects and because of the power balance. If it ever happens it means that big cities will have to bear the cost of providing services to a few hundred million more Chinese. And big cities possess much more power than small villages, so they do not hesitate to flex their muscles and oppose the reform.
Not to mention all the remaining issues the government has to tackle to keep the boat afloat (pollution, unemployment, social unrest, housing bubble). Yet, if the problem of the migrant population is left unchecked, China will probably have to deal with growing slums around its cities. And that is real trouble.
The next generation: migrant workers’ children
These children are having the hardest time of all: they’re caught in the crossfire between adults and governments (local and central), they’re deprived of their right to education, they belong neither to a village or a city and are often forced to move elsewhere when governments decide to displace entire families. Parents do their best to provide them with makeshift schools in temporary housing by pooling their resources together and hiring private teachers.
They often live and study in buildings that are bound to
be destroyed sooner or later. In effect, most migrant workers have jobs in the
construction sector (and manufacturing) and feed the housing bubble in China:
hundreds and hundreds of new towers are built every year in every major city.
- Land grabs (sidebar) -
To make room, old villages and districts are being wiped out and people forced out of their homes. Land grabs are another great cause of poverty in China, and it’s not uncommon for local officials to hire mobs to get rid of reluctant inhabitants.
Needless to say, a lot of these land grabs are completely illegal and many Chinese attempt the trip to Beijing to complain about their local government. But here again, mobs are often hired to stop them on their journey. And more riots happen. The “private security” business in China is booming and worth a few billions dollars. In a way, local governments have created their own police to get rid of “dissidents”.
Back to migrant workers
Despite the high hopes of the parents, the second generation of migrant workers usually ends up living in the same dormitories and working the same jobs in manufacturing and construction. The ambition that their parents transferred onto them for their own lives is by and large frustrated: comfortable life, decent wages, none of that gets a “checked” mark on their list.
However it means they do something completely new: they jump from one job to another as quickly as they can, in a quest for something that they might actually like. In a recent survey, over 90% of them have stated their eagerness to jump ship. From a social viewpoint, that’s a lot of social discontent that the government should be worried about. It may claim that there are yearly pay rises, sometimes up to 15%, but they know it merely matches inflation.
The only way this youth can get access to education is by returning to their hometown, which they’ve often never seen. Most of the time, they don’t speak the (radically different) local dialect. They’ve never even worked in a farm, in case they would need to make a living while studying, which they usually do. Education remains the golden key to start a new life, alleviate poverty in China and everyone knows it. But for migrant workers, it's just hard to accept reality, let alone change it.