Why the Gap between City and Countryside Remain Stubbornly Large - Coursework Example

While the Economic Reforms have benefitted all in absolute terms since the early 1980s, the gap between city and countryside remain stubbornly large. Why is this? The economic reform in China has been a gradual process. It has been highly experimental and fundamentally political (Guthrie, 2012, p. 11). Despite the close relationship of the state with the economy, the reforms have been successful. While the authoritarian political system remains, the state has gradually moved towards democracy over the past three decades. In the mid 1980s agriculture was regarded as the leading sector. But with the acceleration of the industry, heavy industry took the pivotal position in driving the growth of the economy (Zhao & Dickson, 2001, p. 92). The Chinese economy is characterized by scarce capital. Planned allocation of resources in the agricultural sector has made way for “the maximum mobilization of resources for the development of heavy industry” (Lin, Cai & Li, 1994, p. 13). This paper reflects upon the phenomenal gap that exists between the city and country sides in China even after the benefits that have emerged after the Economic reforms. Reforms: Heavy industry oriented growth & its benefits The choice of growth was made in a comparative advantage defying fashion. China was mainly an agrarian economy with low income and scant reserves of capital. However, in spite of being scarce in capital, the development took place through the expansion of the heavy industry that was capital intensive. The country welcomed investments from foreign investors. The rate of industrialization in the country increased at a high rate and simultaneously, the concentration of population in the urban areas started to rise. In the period between the years of 1953 to 1985, more than twenty five percent of the investment made by the state was devoted to the heavy industries. As a result there was a huge increase in the contribution of the output of the heavy industries as a percentage of the GDP of China. However, higher ratio of expenditure by the local governments to the local GDP leads to severe local protectionism (Perry & Wong, 1985, p. 207). Local protectionism acts as a form of barrier to trade (Bocchi, 2009, p. 285). The consequential adversities Although there has been significant growth of the economy, it has paid a high price for such an approach towards growth. Keeping aside the rate of growth, in terms of the comparative advantage and technical efficiency, the structure of production in the economy has become significantly inefficient. Low efficiency of allocation of resources – In China capital is rather scarce in comparison to labor. If the market would have been allowed to determine the prices of the commodities, the prices of capital would have been much higher than the prices of labor. Therefore natural profit incentives would drive the entrepreneurs to adopt labor intensive technique of production. This would preserve the parity between the availability of resources and the utilization of resources thereby following a structure of production in compliance with the comparative advantage of the economy. Low technical efficiency – The entire system of production has been running based upon planned allocation of resources. The profits earned from this production pattern are not a measure of the level of efficiency entailed in the production process. The entire reserve of raw materials has been maintained exogenously and not determined by the forces of demand and supply in the market. This made the managers less concerned about economical usage of the resources. They did not receive the incentive for such responsible utilization of the resources since the allocations were always made in such a way that led to overstocking or sometimes failure of timely procurement of the resources. The wage rates of the workers and the bonuses provided to them were decided from outside the system of production and were not related to the profits of the enterprises. Thus the workers did not face any motivation from the employers to optimize their efforts (Lin, Cai & Li, 1994, p. 18). This created a loss in terms of technical efficiency and the in effect the producers lose out a part of the profit. The Hukou System Hukou system is “a system of residency permits” (Despite China’s Modernization, the Inevitable Hukou System Remains 2010) that has been in practice in China since the 1958. This system has influenced all aspects of the society and economy in China (Fan, 2008, p. 40). This system of government is aimed at minimizing the migration of the people from the rural areas to the urban areas. The household registration system maintains an official record for the identification of a person by his name, area of residence and other personal details. Based up on this hukou, the citizens of the Republic of China used to be classified as urban or rural. The Hukou system was initially devised as a system for monitoring the movement of the people between the towns and the villages. It was not a system to control their movements. In the early 1950s, people could move freely in and out of cities and also all through the countryside. They had been guaranteed free residential choice upon migration. However, this system could not be sustained for long since scores of rural laborers started to migrate to the city areas. This began to take the pose of a serious burden and required the government to take some steps to stop the ‘blind flows’ of the people. Reforms in the Hukou Legislation The Hukou Legislation lay down by “the National People’s Congress” (Chan & Zhang, 1999, p. 820) in the year of 1958 brought some changes in the concept of this system of household registration. Under this legislation the state received the power to control the citizens’ freedom to move across villages and cities. It started to maintain “recruitment and enrolment certificates” (Chan & Zhang, 1999, p. 820). But, at the same time, the top main concern of the state was to bring accelerating growth in the industrial sector in the country. This necessitated recruitment of large quantities in to the factories, which led to fresh migrations in to the cities. This phenomenon is termed as the Great Leap Forward. The rates of the rural urban migration reached historic high rates during that period. Such inbound migration in the cities was coupled with disastrous famine which set the government to make important amendments within the existing Hukou system. Significant modifications came in place in the early years of the 1980s. The Hukou system finds its existence to this date with these modifications. The hurdles faced by the economy: the rural urban gap Several hundred millions of people live in the big cities of China under the tag of second class citizens. Although they are physically present in the cities, they are descendants of the villages and are treated with negligence. They spend their days with no access to the social benefits that are enjoyed by the urban population and are feebly related to the people in their habitats and their work places. The hukou system delivers benefits to the registered citizens of China in the form of medical benefits, pensions and also provides free education to the children of these citizens. Any legal activity, such as, obtaining a driver’s license or buying a house, is facilitated through the hukou registration. However, with the opening up of the economy, there has been massive rural-urban migration, in which the rural migrants are the worse sufferers. While the people migrated, their residency did not get transferred, and hence the social benefits enjoyed by the urban populace, are also not entitled to them. This is because they are not permanent residential of the cities; they still have the rural hukou, of the place in which they born. The benefits entitled to them are not as developed in the rural areas as in the cities, and when they migrate to the cities, they are barred from accessing the benefits in the cities in the interest of the legal urban residents. The migrant workers live in the cities without the rights of factory workers. This creates a big rural-urban gap. The disorderly process, in which the rural migrants are populating the cities, is impeding growth in the economy. The flood of rural migrants into the cities is gradually becoming a threat to the peace of the cities. Although in the current scenario the hukou system is not quite defensible, it would not be possible to dismantle it immediately. The problems manifesting the rural urban gap all the more have been illustrated below. Problems faced by the rural migrants Negligence faced by the rural sector Although the Hukou system was meant to enhance the economic growth of the country, the direction of growth has been mainly heavy industry oriented. The expanse of this industry is funded by the state by following an unequal pattern of investment. There is an unequal exchange of investment rate between the two sectors. In order to maintain the differences in the pattern of funding, the state has devised a way of blocking the free flow of the resources between the rural and the urban areas. Although the government has assumed the responsibility of making provision of jobs and food for all the people of the urban areas (which is implicit of looking after their welfare), the residents of the areas that do not come under the arena of the cities are being neglected. Denial of basic rights In this hukou system, the “rural residents are treated as inferior second class citizens” (Chan & Buckingham, 2008, p. 582). They are deprived of the services that are provided by the government to the residents of the urban areas. In fact their rights to the access to the basic public utilities are denied. While they are allowed to move to the cities, they are not allowed to avail the transportation facilities in the cities or enroll their children in the schools located in the city in which the parents work. In the later periods of the 1990s a law was passed that protected the rights of the consumers. There has been consumer revolution at the different levels in the economy (Davis, 2005). Discrimination in work places The residents of the rural areas face severe discrimination under the hukou structure. They are not hired for the highly paid jobs in the cities. The urban dwellers segregate some of the work by labeling them as “”dirty”, dangerous or very low paying” (Chan & Buckingham, 2008, p. 583). The rural people that migrate to the urban areas in search of better means of livelihood are bound to take up only such jobs. This confers a low status to them and is further demeaning for these people. Incomplete urbanization The process of the urbanization made possible under the hukou system is laden with a major flaw. The peasants are not provided with any kind of support by the state which provides support and several benefits to the city dwellers. This inspires the rural people to migrate to the rural areas in hope of availing these benefits. They migrate to the urban areas but are faced with serious problems in the cities. While they are allowed to migrate, they are not provided with any support for finding a suitable job or the assurance of occupying a permanent place of residence. They are also denied the other social benefits that the original city dwellers are naturally entitled to. Rural Urban Apartheid China has a history of rural urban apartheid and the hukou system is an infamous part of it. The cities have invisible fine lines that divide the urban from the rural within the city areas. All the above mentioned phenomena play their roles in order to preserve these lines of division and can be identified as the “major source of injustice and inequality” (Chan & Buckingham, 2008, p. 583). This has laid the foundation of the special stratification and inequality in the society in China and one of the most profound forms of violation of human rights in the country. The Minimum Livelihood guarantee: Dibao “The minimum livelihood guarantee” (Solinger, 2008, p. 3) has been devised by the government and it is supposed to act like a cash transfer program. Popularly known as the ‘dibao’, this program is implemented to supplement the incomes of those households in the urban areas whose incomes falls short of the minimum threshold, determined locally, which is necessary for the family to maintain a basic level of survival in that particular region. This provision is similar to the ‘modern welfare reform’ as enforced in the Western countries. The concept running behind this policy is that of providing the members of these families the fund that is required to keep their “body and soul together” (Solinger, 2008, p. 3). Not only the present recipients, but also their progenies are provided with these funds. This apparently appears to a constructive measure leading to social benefit; however has deeper implications. The people receiving the grants are looked upon as paupers and stricken with penury. The provision of the bare minimum level of monetary support forces one to inquire into the fact that whether these people would belong to this social status and income group for all their lives and also convey the same to their children. They remain too ignorant, unskilled and unwell to be elevated to the better standards of livelihood. They appear to be the anti-emblem of China’s efforts towards urbanization. Tax-for-free reforms The fiscal predation by the local governments has increased dangerously over the since the 1990s. Tax-for-free reform has been proposed as a probable solution to this problem in order to ease the burden of the peasants. The program being entirely dependent upon the financial sponsorship of the central government is hard to be enforced as a national program. The poor peasants would be open to the risk of further discrimination (Yep, 2004, pp. 42). Conclusion Recent surveys show that the income inequality in the rural as well as urban areas in China has fallen since 1995. This raises the question whether the equity oriented developmental policies are responsible such changes. There has been improvement in the wage rates and farm income and better distribution of the tax rates (Khan & Riskin, 2005). During this period authoritarian nationalism has taken shape in China. It subordinated the interests of the civilians to those of the state. This brings forth the issue that it might create a barrier to democracy (Zhao, 2000). However, this depends upon the coalition or contestation of the different actors in the political economy and the victory of one party over the others (Fewsmith, 2001). References 1. Bocchi, AM 2009, Reshaping Economic Geography in East Asia, World Bank Publications. 2. Chan, KW & Zhang, L 1999, The Hukou Systam and Rural-Urban Migration in China: Processes and Changes, The China Quarterly, pp. 818-855. 3. Chan, KW & Buckingham, W 2008, Is China Abolishing the Hukou System?, The China Quarterly, 195, pp. 582-606. 4. Davis, D 2005, Urban Consumer Culture, The China Quarterly, 183, pp. 692-709. 5. Despite China’s Modernization, the Inevitable Hukou System Remains 2010. Available at: . [5 February 2013]. 6. Fewsmith, J 2001, China Since Tiananmen: The Politics of Transition, Cambridge University Press. 7. Fan, CC 2008, China on the Move: Migration, the State, and the Household, Routledge. 8. Guthrie, D 2012, China and Globalization: The Social, Economic and Political Transformation of Chinese Society, Routledge. 9. Khan, AR & Riskin, C 2005, China’s Household Income and its Distribution, The China Quarterly, 182, pp. 356-384. 10. Lin, JY Cai, F & Li, Z 1994, China's Economic Reforms: Pointers for Other Economies in Transition? World Bank Publications. 11. Perry, EJ & Wong C 1985, The Political economy of reform in post-Mao China, Council on East Asian Studies/Harvard University. 12. Solinger, D, 2008, The Dibao Recipients: Mollified Anti-Emblem of Urban Modernization. Available at: < http://www.socsci.uci.edu/~dorjsoli/china_perspectives_2008.pdf>. [5 February 2013]. 13. Yep, R 2004, Can Tax for Fee Reform Reduce Rural Tension in China? The process, progress and limitations, The China Quarterly, 177, pp. 42-70. 14. Zhao, J & Dickson, BJ 2001, Remaking the Chinese State: Strategies, Society, and Security, Routledge. 15. Zhao, S 2000, China and Democracy: The Prospect for a Democratic China, Routledge. Read More