Crisis undoes years of rural progress
In recent years, rural incomes on the mainland have been rising relatively quickly. But Beijing remains keen to raise living standards in rural areas, which for the most part have lagged behind the rapidly developing cities. Poverty initiatives have included production subsidies, grants and special loans. At the same time, farmers have been getting better prices for their produce.
In the past year, however, new developments have put the brakes on rural income. Natural disasters have taken their toll on harvests. Higher prices for produce were greatly offset by rising costs of chemical fertilisers and pesticides when oil prices soared.
At the start of the year, the situation deteriorated further as the global financial crisis hit China's exports. At least 20 million of the nation's 130 million migrant workers had to return home before the Lunar New Year after losing their jobs. That number will continue to rise.
As more migrant workers are retrenched, rural households will naturally suffer.
Migrant workers returning home to start their own business ventures is now seen as a promising solution. Up to last September, some 8 million former migrant workers had started businesses in their home villages, creating 30 million jobs. This has helped alleviate the traditional influx of underemployed rural labourers moving to the cities. Hopefully, this trend will continue.
One pressing problem for rural entrepreneurs has been securing start-up capital, as banks are extremely reluctant to lend. The authorities appear to be well aware of the problem, and have begun developing rural financial institutions to meet this demand. But is still early days for rural finance, and most peasants still must resort to guanxi (personal ties).
Many small cities and towns in the coastal provinces have opened labour offices to help returning migrant workers find jobs. At the provincial level, some human resources development corporations have been set up as limited companies with branch offices providing free training programmes. But these programmes do not seem to be meeting market demand, and the results have not been impressive.
The global financial tsunami has generated a flood of unemployed migrant workers. With no social security net to speak of, many migrants have no choice but to return to their villages. In the wash up, Beijing's substantial efforts to raise rural incomes have largely been cancelled out.
Young people who have been working in cities are often reluctant to take up farm work. These idle youth easily become a social problem. It is a problem the cities are transferring to the rural sector. Crime has begun to rise in many rural towns and small cities. A rapid rise in unemployed youth will only contribute to the spread of criminal activities.
Many western governments face rising social discontent as unemployment and poverty worsen. In China, such grievances will be most visible away from the cities.
Joseph Cheng Yu-shek is a professor of political science at City University of Hong Kong
