Grinding poverty
The Economist describes the situation of those who live in rural China and describes them on average as “becoming wealthier.” The chart above shows the situation, and indeed incomes have been rising. We’ll make a comment at the end of this excerpt from the piece:
China’s Communist Party has begun to pay attention to a deep malaise in the countryside: the prohibitive cost of health care and education for the rural poor, mounting debts at the lowest levels of government, bloated bureaucracy and a growing wealth gap between rural and urban areas. Riots have become common, fuelled by the attempts of avaricious governments to raise money by selling farmers’ land. Incomes may have been rising, but so has dissatisfaction. In some parts of China, more than 60% of those in dire poverty have been driven there by medical expenses. And for many rural residents the higher levels of schooling are becoming unaffordable.
President Hu Jintao and his prime minister, Wen Jiabao, like to take credit for what they portray as a change of tack. Under their leadership, the party’s emphasis has switched from an all-out pursuit of economic growth to the need for balanced development that takes more account of the country’s poorest. The need, they often say, is to build a “new socialist countryside”. At a five-yearly congress due to begin on October 15th (see article), the party, at Mr Hu’s request, will rewrite its own charter to give the president’s theory about the need for “scientific development” (meaning pro-poor and pro-environment) the same sanctity as the philosophies of Mao, Deng Xiaoping and Mr Hu’s predecessor, Jiang Zemin. But among the rural poor there will be little celebration.
“If peasants become better off, the country is secure,” said Mr Wen earlier this year. On average, they are becoming wealthier. For the past three years rural income per head has risen by more than 6% annually in real terms. In the first half of this year, pushed by fast-rising food prices, it was up 13%, the highest increase since 1995 according to official media. But the gap between rural and urban incomes has continued to widen. And progress has been far slower in areas like Shaanxi, far from the prospering coast.
Rural China is still home to about 60% of the country’s 1.3 billion people, but agriculture’s contribution to GDP has fallen from more than a quarter in 1990 to less than 12% today. Central-government spending on agriculture and rural welfare as a proportion of total spending has similarly fallen from 8-11% in the 1990s to 7-8% for most of this decade. Thanks to a booming economy under Mr Hu and Mr Wen, the central budget is getting bigger and its expenditure is growing fast. But outlays on health care and education, as a proportion of total spending, remain lower than they were a decade ago.
“they are becoming wealthier. For the past three years rural income per head has risen by more than 6% annually in real terms.” That is true, as the chart shows. However, note that the per capita incomes range from 2500 - 5000 yuan per year. At an exchange rate of about 7.5 yuan to the dollar, the per capita income figures for these rural Chinese are $333 - $666 per year. Grinding poverty, when it comes to buying anything outside the PPP basket. (By comparison, in the Bridgeport-Stamford-Norwalk Connecticut SMSA, per capita income this year is $79,901.)