The seeds of rural discontent

PUBLISHED : Friday, 10 February, 2006, 12:00am
UPDATED : Friday, 10 February, 2006, 12:00am

There is a Chinese saying that officials use to defuse criticism of corruption and mismanagement: 'Eating meat while holding a bowl, but cursing as soon as the bowl is put down.' The meat is a metaphor for the people's vastly improved diet after China's economic reforms, and it is a dig at the insatiable appetite for more economic benefits. But today, it has lost much of its irony because of the growing income disparity. And that raises serious doubts about the government's ability to meet its aim of transforming China into a harmonious society.

Mounting evidence suggests that policymakers and business leaders should not ignore the possibility of large-scale social unrest in the future, however unlikely this may be in the next two to three years. Figures from the Ministry of Public Security show there were 87,000 public disturbances last year, a 6 per cent rise on 2004. If we consider that the government has, of late, quickly muzzled the domestic media on the grounds of 'maintaining social stability', the 'mild' rise in social unrest must mean the situation is probably worse.

Some incidents of public protest have resulted in tragedy, suggesting many local officials are blatantly disregarding the plight of the rural poor. In December, several hundred peasants of Dongzhou village in Guangdong province, who were protesting against land seizures for a power-plant project were shot at. Three people were killed.

In a similar incident last month, near Sanjiao town, in Guangdong, police reportedly beat a 15-year-old girl to death (officials say she died from a pre-existing heart condition). These tragedies reflect a dark side of China's economic development - rampant exploitation of farmers.

Government data shows that the average income in rural China is only one-third of urban residents' income. But the difference in wealth is much bigger. Based on a study, the Chinese Academy of Social Sciences estimates that the average urban income is seven times that of rural areas, if benefits such as better education and medical care for urbanites are included. Greener pastures? Of course, rural residents are better off than they were 26 years ago. Peasants can earn more as factory hands, construction workers and cleaners in cities, and can send money home. But some provinces in the industrial south have had labour shortages in the past two years, coinciding with a moderate recovery in agricultural prices and Beijing's decision to cut the national agriculture tax. Last year, a reduced national agriculture tax meant savings of only 20 billion to 30 billion yuan for peasants, but even such a marginal improvement in incomes triggered a mini exodus of workers from factories in the booming Pearl River Delta.

The government has unveiled additional rural policy initiatives. The elimination of the agriculture tax from this year reflects Beijing's heightened sense of urgency to revive the countryside. The China Banking Regulatory Commission is considering a microfinancing scheme for farmers.

But a real test of government commitment is how far it will take the privatisation of farmland. At present, farmers can only lease land for 25 to 30 years and are often not compensated fairly when officials break the agreements to make way for industrial projects. Rural residents' grievances over such arbitrary disruptions are the spark for the protests. The next stage of rural reform must allow farmers to extend their land leases as an intermediate step towards outright privatisation, or broaden the land use to more lucrative activities. Unless farmers are empowered to be masters of their own domain, they will continue to be bullied - and become an ever more destabilising social force.

Steven Sitao Xu, an economist by training, is the Economist Intelligence Unit Corporate Network's director of advisory services, based in China




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