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Unbalanced growth renews calls for shifting focus from cities to villages

Ananth Krishnan
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Professor Wen Tiejun. —PHOTO: Ananth Krishnan
Professor Wen Tiejun. —PHOTO: Ananth Krishnan

Last Thursday (December 26), every one of the top leaders of China’s Communist Party (CPC) gathered at the Great Hall of the People to commemorate the 120th birth anniversary of Mao Zedong. At a symposium held to mark the occasion, President Xi Jinping hailed Mao as “a great Proletarian revolutionary”, and, close to four decades after Mao’s death, pledged “to hold high the banner” of Mao forever.

A stone’s throw away from where Mr. Xi was speaking, a far less glamorous event was being held — the launch of the latest statistical “blue book” of the Chinese Academy of Social Sciences (CASS), a respected think tank.

The book’s findings could not have been more incongruous, announced on a day when the CPC pledged to protect the legacy of Mao’s Proletarian revolution: it found that the highest average income levels in China today had soared to “20 times more than the lowest average” nationwide, with the increasing wealth gap topping a survey of “issues that concerned Chinese people most” in 2013.

Disparities in income

While the average annual household income at all levels rose 10 per cent in 2012, according to the blue book, the “annual income for high income families reached 43,797.5 Yuan [$7,234 approximately] last year, while low income ones only earned 1,587.7 Yuan [$262], more than 20 times less”, the Global Times reported.

The findings would not have come as a surprise to Wen Tiejun. Professor Wen, who is Dean of the Institute of Advanced Studies for Sustainability at the prestigious Renmin University and also heads its Institute of Rural Finance, has emerged in recent years as among the most influential critics of certain aspects of China’s market reforms, which have over the past three decades propelled the country’s growth story.

The reforms that started with overhauling the rural economy in the 1980s laid the foundation for China’s economic revival, which accelerated further in the 1990s as China’s market opened to the world.

However, the growth model that lifted millions of Chinese out of poverty is coming under fire for leaving behind record inequality, rampant corruption and an unprecedented environmental crisis threatening both the countryside and teeming megacities .

Professor Wen argues that China needs to urgently overhaul its unbalanced growth model, as a new leadership, under Mr. Xi, grapples with launching a second round of reforms.

He is part of a group of scholars who are advocating shifting the focus from China’s cities to the countryside. “Originally, the coastal areas developed [faster] a lot of industries set up for export to the West. Now, their market [for exports] has declined, so we have no choice but to invest inland.”

He hopes the next decade will bring “a new kind of rural-urban integration” that will help bridge the widening divide between the cities and countryside.

This will gradually reverse the migration out of the countryside that has provided the cheap labour driving China’s factories, and also inject vitality into the rural economy.

Empowering townships

He argues that investing in infrastructure at the township level will not only create jobs for farmers closer to their homes, but also alleviate the pressures faced by China’s crowded cities. “If we give capital only to big cities, you may need to have big slums, like Mumbai or Rio or Mexico city. This is not good for development”.

China’s leaders appear to be listening. Between 2006 and 2011, Professor Wen calculates that a total of 4.3 trillion Yuan was invested in rural infrastructure. In 2012, the number rose to 1.8 trillion Yuan.

He says the state sector has to play a key role in this rebalancing, as only it has the capacity to direct investment towards the countryside.

The role of the state has become an increasingly divisive issue for Chinese economists and the media.

Those on the Right argue for stronger market reforms, liberalisation and dismantling State-owned Enterprises (SOEs) as the cure to China’s problems. This has become a “mainstream” view, Professor Wen says.

“We need to go beyond ideology, beyond concepts [such as left or right],” he adds. “I am not trying to fight the mainstream, but only trying to give another voice, so people can decide what is in their interest.

When we build infrastructure and improve conditions in rural areas, maybe people will choose to stay.”

Professor Wen on some days, teaches his students on a sprawling vegetable farm he runs in a Beijing suburb.

In between lessons, his students plant vegetables, tend to the chickens and run a small donkey farm.

“Now more and more urban Chinese too don’t want to live in the cities because of pollution, and are moving to the countryside,” he says, adding that many have even approached him, asking if there was space for them on his farm.

( To be concluded )


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