id21 viewpoint - Getting to grips with development in rural China

The pace of China's rise as a global superpower often amazes visitors, with cities seeming to transform themselves overnight. However, this is only one side of modern China: most rural areas remain overwhelmingly poor. While urban development is undoubtedly important, the development of rural China is a far greater challenge.

The rise of rural-urban inequality in China is a more significant,if less reported, story than the nine percent annual economic growth ratesfocused on by the media. In 2004, average urban incomes were six times that ofrural incomes. This disparity is the highest in the world; tackling this shouldbe China's development policy priority.

Research in rural China illustrates the some of the realitiesof this inequality:

• The recent book 'An Investigative Report on theChinese Peasantry' reports experiences in Anhuiprovince, including corruption, violence against villagers, and the illegalextortion of fees and taxes.
• Research summaries from id21 look at unfairtaxation and unequal inheritance laws (see id21 summary by Zhang).
• In Henan, at least 25,000 villagers who soldtheir blood at illegal blood banks were infected with HIV.
• Other rural problems include high primary schoolnon-attendance and dropout rates, inadequate health care and social security,and illegal land occupation.

Recently, the Chinese government has prioritised rural problems.The last two ‘Number One’ documents, which identify key government policies,have focused on rural development and agriculture. The 2004 document announced -to great surprise - plans to abolish the controversial agricultural tax withinfive years. The government has also promised to provide funding for allchildren to complete their basic education. Other recent laws tackle a range ofrural issues, including village organisation and land management. A law for Protectionof Villagers' Rights is currently under discussion. Other governmentinitiatives are having positive impacts, such as wasteland auctions and resettlementschemes (see id21 summaries by Ho and Merkle). Furthermore,rural people are helping themselves through exciting farmer innovations andorganisations (see id21 summary by Wu).

These recent developments are encouraging, but important challengesremain. Government legislation to promote people’s rights is important, butawareness of these rights remains extremely low in rural areas; many villagers donot know that their children have a right to nine years of basic education, orthat certain fees and taxes are illegal. Even where people do know their rights,it is often difficult to enforce them. While the introduction of villageelections could increase empowerment, village governance is often criticised asineffective.

So how can rural China develop further? There several policyoptions, but many have potential problems.

• Greater redistribution of money from China's economicgrowth, through transferring funds to poorer areas, is difficult to facilitate.Wealthier regions resist tax reforms and expect to keep locally generatedrevenue to meet the growing expectations of their own citizens.
• Urbanisation is a key government policy; thegovernment expects 50 percent of the population to move to urban areas by 2030.However, even if these optimistic targets are realised, it will still leave a ruralpopulation of around 800 million people. 
• Remittances are vital for supporting rurallivelihoods, but it is unclear if they will continue over time, particularly ifhouseholds settle permanently in new locations.
• Agriculture presents a policy challenge: how canagricultural incomes increase, when, following entry to the World Trade Organisation,tariffs are coming down for key commodities, leaving some areas uncompetitive andwith few alternatives?
• Effective rural development requires coordinatedgovernment action, but the large number of separate governance institutions,both within regions and between different levels of government, makesimplementing rural participation difficult.
• Local government resources are often limited,especially areas where economic growth is slow.

The challenges for policymakers in promoting development inrural China are daunting. Whether the Chinese government and localorganisations can achieve equitable growth, better governance, and effective realisationof rights for rural people, while also managing rural-urban transition, is an unansweredquestion. Rural-urban inequality is already a source of unrest in China; inworst-case scenarios it could grow and threaten political stability.  Given the size of China, such unrest wouldhave much wider effects. These might include impacts on neighbouring Asiancountries and on global security and economic growth. Successful developmentpolicies are vital if change in China is to be smooth and peaceful.