Eva Cheng
In January 1994, China's State Council announced a plan to lift 80 million households in 592 rural counties out of poverty within seven years. Dubbed the "Eight-seven plan", the scheme targeted counties with an annual per capita income of less than 400 yuan (A$70) in 1993.
But according to Wen Tiejun, China's renowned authority on the country's rural crisis and deputy general secretary of the Institute on China's Economic Institutions, writing on June 14 (at <http://www.snzg.net>), not only has the plan failed to meet its goal, but 100 million more people have fallen below the poverty line since it began.
On July 19, China's Poverty Alleviation Office (PAO) declared that 800,000 rural residents had fallen below the poverty line during the previous 12 months. This has brought the number of people in China, predominantly from the rural areas, who are subsisting on 637 yuan a year, or 30 Australian cents a day, to 85 million.
China's worst poverty is found in rural areas, and it is getting worse. In 1997, China's urban population was earning nearly two-and-a-half times more than its rural counterpart. Yet, according to the March 7 South China Morning Post, the Chinese Academy of Social Sciences has revealed that the city-dwellers earn on average nearly six times more than rural people.
Quoting state statistics, Wen Tiejun said that in 1995 only 1% of China's rural population had a zero or negative cash income, but by 2000 this figure had ballooned to 46%.
Rural grievances are becoming politically destabilising. Wen Tiejun told a December 2001 forum at Beijing University that throughout the 1990s urban protests surpassed the number of rural protests. This changed in 1999, with rural protests since then being more frequent and larger than city actions.
In an end-of-year review of the country's affairs in 2000, Beijing acknowledged that rural unrest was "the biggest threat" to social order. Little wonder that earlier in the year China's rulers announced that rural taxes were to be reformed in a bid to lighten the load of rural residents.
In March, Premier Wen Jiaobao announced a plan to increase direct subsidies for agriculture by 20% over 2003 levels, to 150 billion yuan, and to gradually eliminate the 5% tax on cash crops over the next five years.
Capitalist 'reforms'
China's vast peasantry played a critical role in the anti-imperialist struggle that culminated in the October 1949 revolution. Partly to destabilise the new Communist Party-led government in Beijing, US imperialism in 1950 waged a war on Korea, China's immediate neighbour, which China had to take part in for its own survival. The war lasted three years.
But China had virtually no industrial base to support this urgently needed military effort. Surpluses from China's vast rural hinterland began to be aggressively extracted to speed up the country's industrialisation.
There are structural causes for China's continuing rural poverty, some linked to its underdeveloped production methods. Others are linked to Beijing's capitalist "free market reforms".
As part of Beijing's "open-door reforms" in the early 1980s, The People's Communes, a three-tier production and social institution in the rural areas composed of hundreds of families, were disbanded. So was collective cultivation of the land and the collective provision of rudimentary social welfare.
Instead, under the "household responsibility system", the right to use a small plot of land was granted to each rural household for cultivation and residency. The sale and distribution of produce were still largely conducted by the state even though rural producers were given the right to sell some produce on the "free market".
Meanwhile, the prices for produce were increased as an incentive to boost production. Price management makes sense in a coherent planned economy, but to do so haphazardly in an economy moving fast in a capitalist direction can bring chaos. Several times since the 1980s these measures have resulted in overproduction, intertwined with shortages, in the midst of dwindling rural incomes.
Fiscal arrangements were also decentralised in the 1980s, giving provincial, county and other local authorities unprecedented autonomy. Numerous local fiefdoms started to take shape. Town and village enterprises (TVEs), controlled by local authorities, were formed for agriculture-related production.
Beijing granted the TVEs generous tax and other concessions. They thrived. But when the concessions ended in 1994, the viability of such low-tech primitive ventures was quickly called into question. No longer enjoying meaningful benefits for "wearing a red cap", the TVEs were privatised in droves. The undisguised drive to make profits by these ventures resulted in massive job cuts. Meanwhile, in the cities, following China's paramount leader Deng Xiaoping's 1992 "southern tour", pro-capitalist measures were given a new big boost.
This marked the end of the period following the "reforms" when rural incomes had significantly improved.
Rural question re-emerges
China's rural question re-emerged in a much more complex form. It was no longer simply a question of rural production. The problems associated with rural communities also became top issues. An increasingly heated debate on the sannong ("three dimensional rural problem") arose.
The production increases in the early years of decollectivisation proved unsustainable. For a start, increased prices were too costly to last. Efficiency also plunged due to the fragmentation of production. The construction and maintenance of rural infrastructure, previously a collective effort, has been seriously neglected.
The pressure to retain labour-intensive work processes rather than mechanisation has been intense due to China's huge population, which has increased from 450 million in 1949 to 1.26 billion. Its rural population during this period rose from 400 million to 850 million. Only about 20% of the land is arable. China's rural population has shrunk since 1949 from nearly 90% of the total population to about 70%.
In a June 2004 analysis (at <http://www.usc.cuhk.edu.hk>), Wen Tiejun wrote that the ratio of arable land to each rural labourer in China is now down to 0.29 hectares, compared to 1.1 hectares in Japan and 52.66 hectares in the USA. Wen expects "this contradiction to get worse in the next 20 years".
Rural production's contribution to China's gross domestic product has plunged from 85% in 1949 to 17% today. The removal of protective tariffs and other restrictions on agricultural imports, required by China's entry to the World Trade Organisation in 2001, is dealing a further blow.
Land-use rights
The granting of land-use rights since the early 1980s has become critical to survival in rural China. But the viability of cultivation has been in decline. To maintain cultivators' enthusiasm, Beijing has extended land-lease tenure from 15 years in the early 1980s to 30 years between 1997-99, to 50 years in March 2003.
Yet the difficulties in making ends meet in the countryside have not been turned around. Beijing eased the food rationing system in 1992-93 to make it easier for rural residents to eke out a living in the cities. Some 140 million people have flooded to the cities, even though they are subjected to myriad fees and denied access to social rights. Many must resort to illegal means just to survive, contributing to escalating crime.
Rural households face penalties if they stop cultivating, even if it can only be carried out at a loss. Many are forced to take out loans to get by. According to a leading critic of China's rural crisis, former Communist Party rural secretary Li Changping, many loan sharks are corrupt CP officials, their families or hangers-on. Li revealed in a September 2002 analysis, "The curbing of two types of extra-legal extraction", that "big chunks of land are contracted to the creditors with 30-50 year terms".
Since land-use rights were first granted, newer generations have increasingly been unable to access these rights. In addition, the practice of local officials seizing land under the pretext of "public use" — often with only token compensation, if any — has become endemic. This has contributed to a growing underclass of "landless" people, a problem Premier Wen Jiaobao acknowledged in March as an increasing problem.
Meanwhile, there is growing pressure from the vested interests to privatise China's land, which hitherto has been all state owned. There is little doubt that the poor rural majority would have difficulty in retaining any land that they might come to own in the aftermath of land privatisation. Social polarisation in China would undoubtedly get worse.
China's rural crisis is enormous and a ready blueprint to solving it does not exist. But the capitalist way of dealing with it has only made things much worse.
From Green Left Weekly, September 1, 2004.
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