March 17, 2007


Rural unrest in China : Worries about poverty and instability in central China (The Economist, Mar 15th 2007)

Although the government appears to be serious about tackling rural problems, its efforts face many obstacles. First, despite being increased to Rmb392bn in 2007, central government spending on rural development remains woefully insufficient. Given that local governments continue to be expected to shoulder most of the burden of rural healthcare and education, the impact of the recently announced increases is likely to be disappointing. The central government's spending on rural welfare continues to pale in comparison to allocations for urban workers. (In 2006 allocations for rural living allowances for China's rural population of 600m totalled Rmb4.2bn; the budget for the minimum living support insurance, which is issued to the estimated 22.3m urban poor, was a much more substantial Rmb13.6bn.)

Another significant obstacle is that the central government in Beijing relies to a large extent on local governments to implement its policies. In many instances, however, local governments are the perpetrators of--or at least complicit in--the abuses suffered by the rural population. This is particularly true with respect to the unfair expropriation of farmers' land for urban and industrial development. Cash-starved local governments have a strong incentive to seize farmers' land, reclassify it as urban, and lease it to developers at a massive profit. Profits from land-conveyance fees paid by developers and investors for long-term rights to use the land have become an increasingly crucial source of local government revenue, without which, ironically, they could provide even fewer public services.

Even where funding is adequate and the local government is co-operative, many national-level programmes are in an early stage of development and require a challenging degree of co-ordination between various levels of government. China's unemployment insurance system, which has no system for individual accounts, is a good example. Participation has been patchy and protection for migrant workers continues to be particularly poor. Out of an estimated 120m such workers, fewer than 450,000 have received unemployment allowances, with many employers avoiding contribution payments. [...]

Ultimately, inadequate support for basic public services in rural areas may constrain economic growth in rural areas, limiting the government's efforts to reduce poverty and create a "harmonious countryside". Access to basic healthcare and other public services in many areas now requires the ability to make an up-front payment, providing a powerful incentive for China's 600m rural dwellers to save any surplus income rather than to spend it or to make productivity-enhancing investments in their farms or enterprises. As a result, the failure of the government to channel sufficient resources to the countryside could slow rural development, making it more difficult to deal with the social and economic problems associated with rural-urban inequality and rapid urbanisation.

In political terms, however, expressions of rural discontent such as the riots in Hunan appear to pose little direct threat to the central government.

Posted by Orrin Judd at March 17, 2007 12:00 AM

So China splits into three - the South China (with Taiwan, Hong Kong Macau), PROC (Northern China & th Norks) and United States of China (the interior), it could happen.

Posted by: KRS at March 17, 2007 2:12 PM

"In political terms, however, expressions of rural discontent such as the riots in Hunan appear to pose little direct threat to the central government."

The author knows not what he writes. All revolutions and overthrown of the emperors began as rural discontent. Even Mao's communists began in Hunan.

Posted by: ic at March 17, 2007 3:50 PM

...Tibet, Uighurstan...

Posted by: oj at March 17, 2007 4:35 PM

Numbers matter if the Maxim gun jams.

But seriously, what of numbers are we talking about here? Illiterates who can bolt a fender on or literates who can design a computer chip?

Posted by: Mikey [TypeKey Profile Page] at March 18, 2007 1:11 PM