CHINA WOOS THE MARKET

[Stephen E Philion <philion@xxxxxxxxxx>]

Le Monde Diplomatique, 15 December 2000

CHINA WOOS THE MARKET

Farewell to the land of the Little Red Book


Twenty years after it launched its economic reform programme, China is
preparing to join the WTO and become part of the world's new free trade
system. Senior officials in Beijing say this decisive step in the
transition to a market economy will stabilise China's external trade
environment, promote growth and secure the "reformist" coalition around
President Jiang Zemin and Prime Minister Zhu Rongji. But this is a
high-risk strategy. Prematurely opening up an economy that is not ready to
cope with international competition will have a huge social cost.

by ROLAND LEW *


Situated in China's geographical heartland (officially the south-west) and
capital of Sichuan province, home to several million people, Chengdu looks
nothing like a major industrial centre. Visitors to this modern city, that
has not yet been caught up in the frenzied activity of the big coastal
towns, feel far from the centre of Chinese development. And yet Chengdu has
seen great changes. The social divide is clear: there are new districts for
the rich and the northern working-class districts around the station - an
area dotted with small and already dirty-grey blocks of tiny flats dating
from the 1960s and 1970s.

Not far away, at the city limits, cross the unprotected railway and you are
straightaway in the urban countryside with its hard-packed dust surfaces
and railway line used by walkers. There is an agreeable, if evil-smelling
stream, a quiet little market, tea houses in basic wooden buildings or the
open air, frequented throughout the day by amiable mahjong or card players,
some younger than others, none apparently in a hurry. This relaxed and
benevolent-looking China exudes the kind of rural calm it is hard to
imagine in the busy and often aggressive coastal cities.

The picture is different in southern Chengdu. Here are the districts that
are being developed for the nouveaux riches, the business bosses and
managers who have got rich - somehow or other. In a long and fairly empty
street dominated by a huge building site, modern flats of doubtful taste,
but with all "mod cons" (fitted kitchen, several bathrooms, and even, in
some cases, a jacuzzi), are being built around ornamental pools and
fountains. There is nothing special about the surroundings: a not very
elegant-looking hospital and recently built, but already crumbling
high-rise apartment blocks obstruct the view. Never mind, here the new
elite can rub shoulders, away from the masses.

The street already has its own western-style café - a rarity this - selling
coffee, a supermarket and an electrical goods store. There are a few
western cars, some chauffeur-driven. The show flat, in a low building,
extends over 200 square metres on two floors. It includes a small corner in
Japanese style with sliding panels to provide complete privacy from prying
eyes. This is imitation chic, modern and western looking, a blend, as in
many modern buildings, of very different styles. What matters is that it
should look flashy - neo-something or other.

The cost of a 70 year lease - urban property like land in the countryside
is still state-owned - is 900,000 yuan (1). Some flats covering more than
300 square metres cost around 1.5m yuan, to be paid in cash. In the late
1970s, in contrast, the average surface area per city-dweller was four
square metres. Now it has more or less doubled. The cost of luxury goods
bought through an official agency (though far more luxurious goods are to
be had) is the equivalent of several hundred years' income for the average
rural worker or a manual worker's unemployment benefit (assuming he
actually gets it).

A few kilometres away, the city centre is a perfect illustration of the
transition from past to future. The many big stores sell everything,
including cosmetic products from Paris - far too expensive for most people.
Right in the centre, a huge statue of Mao is pointing towards neon signs.
Last year lights advertising foreign goods - Philips, Samsung and the other
major international brands - mocked the dead leader once darkness fell. The
irony was not lost on people strolling through what was once the focus of
maoist rallies. This year, as a mark of respect for the harbinger of
national independence, some of the signs around him are advertising Chinese
goods: local capitalism is gaining ground and making its mark.

Far from the centre, next to a bridge near Sichuan university, in what was
until recently the rural fringe of the city, is the kind of open-air job
market that is held throughout the province. Dating from the 1980s, for a
long time it was unofficial but tolerated. Now it is regulated by the local
authorities (and the police). The city authorities have set up a job
information service with notices advertising jobs with small local
businesses available to people who have at least a temporary residence
permit for the city (or will be able to get one through their employer).
Rates of pay vary between 200 and 300 yuan a month for unskilled workers;
500 to 800 yuan for skilled workers (mechanics or cooks); and 600 to 1,200
yuan for well-qualified carpenters.

But the main business takes place next door, in the open-air market that
attracts several thousand people a day (peaking at the time of the spring
festival, China's main holiday). Many migrants come to Chengdu. Most are
peasants without a residence permit, often from the surrounding
countryside. Sometime are workers from the city who have lost their jobs
and not been found new ones by the company or local authority. A row of men
and women, two-deep, try to sell their skills set out in red characters on
a large sheet of paper. Those unable to write themselves use the services
of the public copyists at the market (a few brush strokes will set you back
a couple of yuan).

The women are looking for work as cleaners, sales assistants or waitresses
(the rate of pay is 200-300 yuan a month). The men are often looking for
work as cooks. One, still a young man, displays photos of the dishes he has
cooked; he is confident that he will get 2,000 yuan a month for his
high-quality cooking (a chef with a good reputation can earn a lot more
than that). Some spend days at a time around the market, living in cheap
but basic hotels and sometimes on the streets, but still they fail to get
the work they are looking for, even though they are asking low wages. In
their eyes, every city-dweller is privileged. After all, the low level of
unemployment benefit state workers get in the cities is about 200 yuan a
month - not much less than many peasants earn from what is often hard toil (2).



Unproductive land

According to Professor Yuan Yayu, of Sichuan university's department of
sociology, this is a young population group, more enterprising and better
educated that the rest of the rural population. Ninety per cent of
emigrants arriving in Chengdu have not come via an established network and
most have to make do with very unstable jobs. The same is true of China as
a whole.

For a long time Sichuan was one of China's grain baskets and remained an
agricultural province with little industry. It was severely affected by the
famine provoked by Mao's Great Leap Forward and impoverished by the end of
his regime. Deng Xiaoping (who came from Sichuan) then put it at the
forefront of his experiments in agriculture. These led to the dismantling
of the collective farms and the return of the land to small family units.
With the help of substantial government funding designed to improve
infrastructure, Sichuan is currently endeavouring to play a more active
role in the economic development of the country and industrialisation of
the region (3).

Here, as elsewhere, conditions are bad for peasants. Many country-dwellers
are forced to look for a living outside their village, often far from home.
They stop farming land that is relatively unproductive - and in any event
far from providing them with a standard of living and spending power
comparable to their city cousins (4). In recent years the gap between town
and countryside - already significant in Mao's days - has widened further.

Rural workers began to move to the towns in the early 1980s, when Deng
first launched his reforms. That movement increased sharply in the late
1980s when the number of migrant rural workers was put at 50m or 60m (5).
Even then the majority came from Sichuan (accounting for 10% of China's
population). During the 1990s the trend continued but it was uneven. The
authorities tried to stem it between 1989 and 1991, and to channel and
control it from 1992, but with little success. Carried forward and given
added impetus by the logic of liberalisation, the process of migration is
helped by the fact that the Chinese Communist Party (CCP) has, relatively,
lost its ability to exercise social control and keep a tight rein on the
population (6).

Now on an unprecedented scale (80m to 100m people are on the move), this
development is taking new forms, including the first signs of a mass
exodus, a real abandoning of the countryside.

Mao's China was atypical of the third world. Because the peasants were
forced to stay in their villages, the rapid industrialisation of the first
30 years of the People's Republic of China did not result in a stampede to
the towns. In 1980 the so-called "non-agricultural population" accounted
for only 16% of the total population. The People's Republic was hardly less
rural than the China of old - that was the regime's choice and it imposed
it country-wide with an iron hand. Later, when the maoist economic model
was being dismantled, the peasants began to move of their own accord. The
authorities tried to hold them back by developing small towns within the
countryside. This was the start of a flourishing process of rural
industrialisation, a kind of proto-industrialisation designed to avert the
dangers of an expanding urban sector.

Fear of social instability played a large part in that policy, and the
authorities are still backing it. But they could not buck the trend. Tens
of millions of peasants are constantly on the move, a floating population
that comes and goes, depending on opportunity and need. More people leave
the countryside than return to it, and a section of the "floating
population" has settled once and for all, not just in the rural towns
designed for them but in the big cities, where they form a new worker
sector (7).

That is a measure of the current problems facing the economy. The land
brings in less income than it used to, or at least an income insufficient
to meet modern expectations. In addition, the small-scale rural industry
that provided work for tens of millions of peasants and kept them in their
villages is suffering badly from competing products from the towns or other
countries. That competition will increase with China's forthcoming
accession to the World Trade Organisation (see Marc Mangin's article).

This has led the peasants to look for improved levels of income in the
coastal provinces where they hope to get a better education for their
children and have access to the kind of goods it is often impossible to
find outside the towns. The strong ties with village and land that brought
the peasants back home have been loosened: now they are leaving for good.
But the land is not abandoned (and nor are village and house deserted). It
is leased to or cultivated by a relative (possibly the farmer's own wife).

The statistics confirm, and probably underestimate, that trend. In 1980 84%
of the rural population were very largely working the land. Currently, even
though more than 70% of the population remains in the countryside, fewer
than one in two Chinese are still working directly on the land.

At national level, it is estimated that more than 50% of the rural
workforce is now surplus to requirements. The more developed coastal
regions are taking them in (8), as is the capital, Beijing, a source of
fascination and attraction to peasants looking for work. A locally-based,
provincial or (in the south) clan network usually takes charge of them. It
will find them work and very basic accommodation. The network guarantees
that workers will be "reliable" and do what they are told, and may take
care of them should they fall ill - there is little in the way of social
security. Sometimes peasants use a network for whose services they have to pay.



Desperately seeking work

Towns have one or more informal job markets - some are even specialist
markets. In the heart of Beijing, near the central station and big hotels,
there is, for example, a "women's market". Women from the countryside -
most of them young - look for work there as cleaners (a key element in the
new middle class homes) or servants, or as sales assistants or waitresses
in the many restaurants. Some are looking for less reputable work.

Though public and there for all to see, the market maintains a low profile.
Banished by the police from the main thoroughfares in 1999 because of the
celebrations to mark the 50th anniversary of the People's Republic, it has
taken refuge in the side streets. The atmosphere is friendly. The same
cannot be said of the "men's market" located in a less frequented district
outside the centre, close to the city's Western station and third ring
road. The skills offered by the young men who have also come from the
distant countryside are less specific; the boundary between job-seeking and
delinquency less clear. The tension is palpable and the police are not far
off. These are desperate migrants who have no real network to look after
them in the vastness of Beijing.

Often a boss or building site manager will use his contacts to arrange for
peasants to be hired. The men are to be found on building sites everywhere
and the young women in restaurants. All are doing unskilled and low-paid
jobs. But even this lowly status may be beyond their grasp. In response to
increasing social pressure during this period of high urban unemployment,
Shanghai is one of the cities to have reserved some unskilled but
undemanding jobs - lift attendant or concierge, for instance - for people
with an urban residence permit (the infamous huku).

That is one sign of the growing tension between workers well established in
the towns and the new workforce of rural origin that is trying to gain a
foothold. For the moment, contact between them is limited, but there is
some competition, particularly in private sector factories. They are less
subject to state constraints or less scrupulous in obeying the rules.
Despite the statutory restrictions, they are more willing to recruit rural
workers, who cost less and receive little or no social security benefits.
If they have no proper education, their income is often very low, according
to city regulations. Many waiters and waitresses are paid about 300 yuan a
month, and building site workers about double that. Given more or less
adequate board and lodging at their workplace - though the conditions are
often basic, a restaurant table may double as a bed for the night - or in
dormitories, they save up and send the bulk of their earnings back to their
families. That way, in a few years of very hard work (12 hours a day, 6 or
sometimes 7 days a week), they save what they need for the dowry a future
husband has to give his bride, or that a sister gives her brother, so that
he in turn can marry.

Sometimes the money is used to fund a relative's studies. Then it is up to
the young man or woman who manages to get on in life to help the family,
particularly parents in their old age - peasants do not get pensions.
Getting a proper education is increasingly a motive for moving to the big
city. In rural areas, secondary education is poor or non-existent and
primary education, no longer free, is often restricted to private schools.
That is a heavy financial burden - secondary education is often expensive.
Renowned for its many good schools at all levels, Beijing attracts people
from the countryside who know the Chinese proverb "books contain gold".
They may use the money they earn to open a small shop in the village, help
set up a small business or pay for a new house.

There is no knowing exactly how many of China's population are trying to
move permanently to the cities, but the trend marks a complete break with
the past. The numbers of small restaurants or cheap cafés in Beijing
offering Sichuan's famous cuisine at low prices at least shows their
determination to stay.

* Roland Lew is one of the editors of "Le Siècle des communismes",
L'Atelier, Paris 2000.

(1) There are approximately 8 yuan to the dollar.

(2) The national average of 240 yuan in unemployment benefit at the end of
1999 masks substantial regional variations: 140 yuan in Sichuan but 400
yuan in Shanghai or Beijing. See Jean Louis Rocca "L'evolution de la crise
du travail dans la Chine urbaine", Les Etudes du CERI, Paris, May 2000, p 26.

(3) The western region has been given priority in the current programme of
major works. Shanghai Daily, 17 May 2000; China Daily, Beijing, 19 May 2000.

(4) D Davis (ed), The Consumer Revolution in Urban China, University of
California Press, Berkeley, 2000.

(5) Hein Mallee, "Migration, huku and resistance in reform China", in E
Perry and M Selden (eds), Chinese Society: Change, conflict and Resistance,
Routledge, London, 2000.

(6) H Mallee, op cit, pp 84 et seq.

(7) Jean Philippe Beja, "Les travailleurs itinérants, des immigrés de
l'intérieur", Perspectives Chinoises, Hong Kong, no 21, January-February 1994.

(8) Philip S Golub, "Shanghai express", Le Monde diplomatique, English
edition, August 2000.

Translated by Julie Stoker