China's Impoverished Countryside

Development Policies Serve Only to Widen the Gulf

August 24, 2004

XUPU, China -- Pass through Xupu and you'll see an endless expanse of rolling hills, green from the summer rains. Farmers are hunched over in the fields, working the land by hand. Women at the town market sit behind mountains of watermelons while young girls spend the afternoon supervising the family's water buffalo.

Stay in Xupu a while and you'll learn of arrogant officials who wine and dine on public funds while confiscating food from families who don't pay taxes, armed gangsters who run a thriving trade in girls for prostitution, and villages full of aggrieved peasants with nowhere to turn.

In both ways, this remote area of western Hunan province, the birthplace of Mao Zedong, is like much of rural China.

While China has been pouring resources into developing its cities, its countryside is falling further and further behind. Far from the well-dressed young professionals meeting at Starbucks cafes in downtown Beijing and Shanghai, buying their first cars and upgrading their cell phones every year, the two-thirds of the population counted as peasants have tasted few fruits of China's economic boom.

"Ever since the nation began opening to the outside world in the late 1970s, coastal provinces such as Guangdong, Zhejiang, and Fujian have reaped the lion's share of wealth, ... but nine interior provinces ... have remained appallingly poor," said the official People's Daily newspaper.

As much as 70 percent of foreign investment continues to go to coastal areas while a "poverty belt" has formed in the interior regions, the paper said.

In just two decades, China has plunged from one of the most egalitarian societies in the world to one of the most unequal. By some measures, it has the largest wealth gap in the world, worse than Zimbabwe.

"Ironically, everyone thinks China is a great success story and Zimbabwe is a failed state," said Wenran Jiang, a China expert and professor of political science at the University of Alberta in Canada.

Experts increasingly fear that China's development is unsustainable, with the ever-widening disparities threatening to choke future growth and simmering rural discontent threatening to boil over.

The Communist Party leadership has made helping the disadvantaged one of its top priorities, calling for reducing "peasants' burdens" by slashing taxes and increasing subsidies. But it has offered only economic solutions for a problem that is political in nature: in China's two-tier system, peasants are second-class citizens.

Local corruption seen as endemic

One of peasants' top complaints is corruption by local officials.

As early as 1997, some villagers in Xupu (pronounced SHOE-pooh) suspected irregularities in the accounts, so they asked a trusted elder and former village accountant, Zhang Xisheng, to conduct an informal audit of the village finances. He went through the receipts and uncovered more than $35,000 worth of illegitimate expenses in one year, said Wu Wenjun, Zhang's cousin.

"One day, the officials ate seven times at one hotel. Seven times! We couldn't understand it," Wu said with disbelief. "A bunch of the receipts were for Miss Zhang this and Miss Wang that. It was a mess. You can imagine how angry we were."

The villagers decided to demand a receipt for each of the taxes they paid, but officials refused. When villagers stopped paying, officials went to their homes and took their pigs and rice, Wu said. Later, he said, some officials illegally took out bank loans in the names of 40 villagers by counterfeiting their personal chops, or seals, which are often used as a signature.

Zhang took on these cases and many more, going to county and provincial offices to file petitions on behalf of villagers.

"He got a reputation as someone who believes in law," Wu said. "As soon as people hear there's someone who fights for justice, they seek him out. All these people came in tears."

One day in 2002, Zhang, accompanied by dozens of villagers, went to the Xupu police station to inquire about a fellow village representative who had been arrested. An officer said he'd make a phone call to check, but instead, he called some local gangsters.

Within minutes, a white car and six motorcycles showed up at the station. Eighteen men stormed in, many of them with tattoos, all of them carrying knives and sticks, Wu said. They started beating everyone in sight. One person was killed and another paralyzed.

Decades after the Communist Party wiped out bandits, mafia-type gangsters known in Chinese as "the black society" are back terrorizing the countryside. Often they work for officials, intimidating villagers who don't pay taxes or otherwise comply with demands.

"Hooligan gangs organized by township governments are running amok in the countryside," Yu Jianrong, a researcher at the Rural Development Institute of the Chinese Academy of Social Sciences, wrote in an essay.

The party secretary of one county in Fujian province has received so many threats from gangsters that he has been wearing a bulletproof vest for six years and this month (August) wrote an open letter to the media detailing the pressures he faces.

Prostitution filling the wage gap

In Xupu, pimping has become one of the most lucrative trades for gangsters. Girls are recruited or forced into service and sent to work in hotels and beauty parlors throughout the country. Village elder Zhang tried to intervene after three teenage girls were kidnapped from the frozen confection factory where they worked and sold into brothels. Xupu police demanded $200 from each family to investigate.

"After that, a lot of girls have been tricked away," said Liu Youling, Zhang's wife. "They're all young. Only the young ones can be deceived."

Xupu must have more than 1,000 pimps, she said, alleging that one of the biggest is a village chief. The local middle school has built a 10-foot wall around its yard to keep pimps away. Families no longer bother to report when their daughters disappear, knowing the police will do nothing and the publicity will bring only shame to the family.

"What good is it for them to tell anyone?" Wu said. "It'll just bring them a bad reputation. The girls still have to find husbands."

Prostitution is rampant in China, in part because young women from the countryside have few other ways to make money. A survey of 382 prostitutes working in beauty salons in Shenzhen, a southern boom city bordering Hong Kong, found that 85 percent were from villages and another 10 percent from small towns.

Many go into the business willingly. At 22, "Xiao Xiao" is the youngest of four children. Her two brothers went off to Guangdong province to find work and haven't been heard from in more than a year. Her older sister married into a family even poorer than their own. Her village got electricity only a decade ago.

Xiao Xiao dropped out of school after sixth grade because her parents could no longer afford the school fees. Eager to earn some money, she found a restaurant job making $18 a month. It wasn't much, but she feared going to a big city for a factory job as millions of young people have done. Xiao Xiao has never even left Xupu county.

"It's too dangerous out in the world," she said.

When someone offered her a job at a hotel beauty salon selling her body, she says she thought about it for a month. Finally, she accepted.

"I thought, that's the way our society is now," she said. "Our family is so poor. You don't know how long you're going to live."

She added: "I hate this job. But I have no choice."

For each client, she charges $18 and gets to keep $12 of it. Asked what plans she has for the future, Xiao Xiao is no dreamy optimist. She figures she'll stay in the job for a few more months, then marry in a year or two, but adds, "We can't think about the future too much. Not like you, you can do anything you want."

More rural Chinese are in dire straits

The Communist Party made real strides in the countryside in the early years of the reforms, lifting millions out of poverty. But last year marked the first time in 25 years that the number of people living in dire poverty (defined as an annual net income of less than $77) went up, rising by 800,000.

One of the core problems, says Jiang, the scholar, is the two-class system that favors urbanites and urban development.

"The rural population is being exploited to subsidize the urban population," he said.

Whereas most industrialized countries give big state subsidies to the agricultural sector, in China the reverse is true. Farmers have four times the tax burden of city dwellers and none of the benefits available to many in the cities, such as subsidized education and health care and unemployment benefits. And it is almost impossible for them to become official urban residents, though millions have migrated to cities for low-paying jobs with little legal protections.

"The Chinese government has made policy choices ... that made the majority of Chinese people worse off, or relatively worse," said Jiang. "The consequences of such a policy choice, making most people poorer to let them subsidize urban development, are a potential time bomb for social instability."

Should China continue down this road, some experts fear the "Latin American phenomenon" of urban slums, an entrenched elite and a large corps of the permanently disadvantaged. Even Chinese scholars have been asked by the government to study the issue, Jiang said.

But the Latin American parallel that most worries Chinese officials is not poverty and disparity, but technological dependence on the West.

"The Chinese government is worried China will simply become a processing zone of using other people's technology and supplying cheap labor," Jiang said.

Some proposed solutions to the rural crisis -- such as privatizing farmland, allowing farmers to organize, and eliminating the township level of government -- are seen as too politically radical for the Communist Party to countenance.

For now, local officials are relying on harsh tactics to suppress dissent. Ordinary villagers are routinely bullied, while those who dare to stand up, like Zhang, are imprisoned. Zhang is now serving a seven-year sentence on a charge of damaging state property. Xupu authorities refused to comment on the case.

"I've thought about it. I can't understand what has become of this society," said Liu, his wife. "The bad people are good and the good people are bad. I think about it, and I cry. How long can such a society last?"

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