China juggles the urban and rural divide.

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Back to the villages in China Pallavi Aiyar http://www.hindu.com/2006/03/01/stories/2006030104541100.htm The Chinese Government last week announced an ambitious new rural policy that focusses less on indiscriminate growth and more on redistribution of resources and rebalancing of incomes. CHINA'S DOUBLE-DIGIT economic growth has led to the creation of shiny cities, bathed in neon. But the inequalities that have also resulted from this economic metamorphosis are increasingly hard to disguise with urban glitter. Following mass protests in the countryside in the face of corruption and poverty in recent years, the Chinese Government last week announced an

ambitious new rural policy, which crystallises the leadership's ongoing efforts at giving fresh direction to China's economic policies. The focus of these new policies is less on indiscriminate growth and more on redistribution of resources and rebalancing of incomes. At the core of these efforts, termed the creation of the "New Socialist Countryside," is beefed up government spending on basic education and medical care, additional subsidies for farmers, and large injections of funding in rural infrastructure projects. This rural initiative is likely to be the centrepiece of the new five-year plan (for 2006-2010) that will be deliberated by the National People's Congress (NPC), China's legislature, during its annual meeting on March 5. Some initial spending figures are also expected to be announced during the NPC meet. The new plan has been three years in the making.

Ever since taking office in late 2002 and early 2003, China's President Hu Jintao and Premier Wen Jiabao have repeatedly stated that their administration's top priority is to tackle the rich-poor gap, symbolised most baldly by the urban-rural divide. China's 800 million-odd peasants comprise 70 per cent of the country's total population, but with an average annual income of $400 (a third of average urban incomes) they make up only around 40 per cent of domestic consumption. The gap is exacerbated when factoring in health care and other social benefits provided to many urban residents but lacking in the countryside. The new initiative also reflects the Government's alarm at the escalation in the number of peasant protests in the last few years. According to the Ministry of Public Security, in 2005 there were a total of 87,000 mass protests across the country, expressing public anger

against official corruption, illegal land seizures, and unpaid wages and pensions. The number of such protests has seen a more than 400 per cent increase over the last decade. Many of the efforts outlined in the new rural plan have in fact already been experimented with in pilot projects. Notable among the various schemes aimed at improving the lot of farmers is the abolishing of the hundreds of years old agricultural tax from January of this year. In December 2005, the NPC provisionally approved an additional budget of 100 billion yuan ($12.5 billion) a year to rural areas, the bulk of which — 78 billion yuan — will go in making up the loss of revenue to provincial governments following the abolition of the tax. But lifting rural incomes through subsidies and tax cuts is only part of the challenge the Chinese Government faces. The sectors of greatest neglect in rural areas have, in fact,

been health and education services. These used to be free but have over the years become privatised and out of the financial reach of most rural residents. Moreover, the centre has for the large part left it to cash-strapped local governments to come up with the bulk of funding for these services. But as Anjana Mangalgiri, Education officer for UNICEF's Beijing office, points out, "Local officials are promoted and rewarded on the basis of their ability to generate physically tangible examples of `progress' like roads and factories. Education and health, the softer sides of development, are not rewarded in the same way and do not bring short-term gains for the officials, so they are neglected." Fall in health spending The Government's share in

national health spending has plunged from close to 100 per cent in the heyday of the communist revolution to about 15 per cent today. Less than 10 per cent of China's rural population has any medical insurance. Moreover, big cities in China consume 80 per cent of the country's medical resources although only a third of the Chinese population lives there. In 2000, the World Health Organisation ranked China 144th amongst 191 countries on the basis of fairness of access to health care and fairness of individual contributions to cost. Even India ranked ahead at 112. At a press conference in Beijing last week, Chen Xiwen, the top government adviser on rural issues, stressed that the Government was aware that "the [urban-rural] divide is even more compelling for social undertakings such as education and health," and these will be on top of the policy priority list in the coming five-year plan period. While it has not

been announced how much will specifically be spent on rural health care, efforts to improve access and affordability to medical services are likely to involve cooperative health care networks where medical costs will be covered through a combination of contributions from the central and local governments as well as the farmers themselves. China's new policy also promises that by 2007 rural students will no longer have to pay for textbooks and heating in schools. Students from poorer families will receive boarding and transport subsidies. Proposals to hike the remuneration for teachers in rural areas are in the process of being considered, as is a plan to make it compulsory for teachers from cities to work for part of the year in the countryside. The Central Government recently promised an additional 218 billion yuan ($26.9 billion) over the next five years to boost basic education in the

countryside. Most significantly, local governments have been warned that they will be held to account for progress made on social services and that their promotions will no longer depend exclusively on their attracting investment for hard infrastructure projects. Critical lacuna But many analysts say that the critical lacuna in the new rural initiative is that it leaves unresolved the fundamental issue of whether farmers will be allowed to buy and sell land. Under the Chinese constitution, farmland is held collectively by the villages, so that individual farmers who have leases are easily exploited by local officials who claim the land for development projects. Farmers are usually given woefully inadequate compensation in return. Moreover, internal migration for rural residents to China's bigger cities remains restricted, narrowing their options and ability to climb out of poverty. In the span of some 25 years, China has gone from being one of the world's most equal, albeit poor societies to the fourth largest economy in the world with one of the worst rich-poor imbalances. China's gini index — a commonly used statistical measure of inequality where 0 represents perfect equality and 100 perfect inequality— of 44.7 is worse even than that of India's 32.5, according to the UNDP's 2005 Human Development Report. Given this situation, the success of China's new rural plan will be crucial to the sustainability of the country's economic dynamism in the long-run. "Our ideal is not the spirituality that withdraws from life but the conquest of life by the power of the spirit." - Aurobindo.

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