Special Report:Global Financial Crisis
by Chinese media writer Wang Xiuqiong
BEIJING, Feb. 6 (Chinese media) -- With the Chinese
government pinning its hopes for economic resurgence on stronger rural demand,
the swelling ranks of jobless migrant workers are making it a much tougher task.
Chen Zhiwei is leaving home in southwest China's
countryside for his ninth year of city laboring, but he has no clear destination
this year.
He quit his job at a timber plant in Jiashan,
Zhejiang Province, at the end of 2008 after seeing his monthly pay shrink to 800
yuan (117.6 U.S. dollars) from 2,000 yuan.
"It was bad times -- 800 yuan was not even enough for
basic spending there. I had no choice but to come home," said Chen.
Growing joblessness will slow income rises for rural
residents and compound the economic troubles China faces in its attempt to boost
rural consumption, a key part of domestic demand.
With less cash back for Chen's family in rural
Manjing Township, Sichuan Province, this year's Spring Festival celebration will
be subdued.
"I don't think it will be easier (to find a job)
after the lunar New Year," he said.
The government estimates about 20 million rural
migrants, or 15.3 percent of all rural workers employed outside their hometowns,
have returned home without jobs.
The number reflects a harder-than-expected blow from
the global financial crisis, says Tang Min, deputy secretary of the China
Development Research Foundation.
Slumping foreign demand has forced China's coastal
industries to close or scale back production, claiming the jobs of millions of
migrants.
"Large scale layoffs of migrant workers will take a
heavy toll on rural incomes and consumption," Tang says. Official figures show
migrant wages account for about 40 percent of the average net income of rural
Chinese.
Moreover, income changes affect farmers' spending
more obviously than they do for urbanites, said Wen Tiejun, head of the School
of Agricultural Economics and Rural Development at the Renmin University of
China.
"Research shows if a farmer earns more, he will spend
70 percent of the increase, compared with 50 percent for an urbanite. When less
money is made, rural people will cut spending more drastically than city
dwellers."
That's bad news for Chinese authorities, who are
focusing on domestic demand as the bases for faltering economic growth.
"The countryside holds the biggest potential for
boosting domestic demand," said the State Council and the Central Committee of
the Communist Party of China in the first document of the year issued Sunday.
The document outlines policies to raise rural
subsidies, improve infrastructure and better tap the vast rural market.
China should "especially place priority on tapping
the rural market and developing the countryside" to alleviate the effects of the
global financial crisis, said Vice Premier Wang Qishan last month.
RURAL
SETBACK?
The spending potential of more than 700 million rural
people, about 55 percent of China's population, should not be underestimated,
says Tang. "Rural demand is still key to China's long term economic future."
The average per capita net income of Chinese rural
residents reached 4,761 yuan last year, a real annual growth of 8 percent.
That was down from 9.5 percent in 2007, when farm
produce prices ran high, but still higher than the annual rates of 2004, 2005
and 2006.
Retail sales in towns and villages outpaced urban
growth for the first time in November, rising 20.9 percent year-on-year to 210
billion yuan, according to the National Bureau of Statistics. That was 0.6
percentage points faster than the rate in cities.
However, the growing trend would suffer a setback
this year as more labor-intensive enterprises fell victim to the economic
downturn, says Wen Tiejun.
He says it's still too early to say if the economic
slump will go so deep as to reduce the average net income of rural families.
Chinese farmers have experienced two periods of
continuous earning decreases since the market-oriented reforms were launched 30
years ago. The first came as a result of runaway inflation in late 1980s and the
second was due to the Asian Financial Crisis in1997.
The first decline lasted three years and the second
four years, and both were caused by sharply lower demand for farm produce, says
Wen.
"This time, the non-farming revenues are affected and
the crisis is global," he says. "What we face now could be more serious."
LONG WAY TO
GO
China's rural consumption has been accelerating since
2003, but still lags behind urban growth, even during the good times.
In 2007, retail sales of consumer goods in the
country's counties, towns and villages rose 15.8 percent to 2.88 trillion yuan,
1.4 percentage points lower than in the cities.
National economic output grew 13 percent that year,
the highest annual rate since 1994. It slowed to 9 percent in 2008.
Many companies were too reliant on exports and
neglected the rural market, says Tang.
He wants manufacturers to adjust product design to
rural demand and expand maintenance networks in the countryside.
Chen must do his sums before he spends.
When times were good, he would send almost half his
wages, about 10,000 yuan a year, back to his wife, child and parents, who
subsist off just 3 mu -- a fifth of a hectare -- of farmland, he says.
A majority of the remittance was saved for Chen's old
age, as China's pension insurance system does not allow fully transferring
pension funds between provinces.
That left Chen with just enough to pay his rent and
basic living costs.
He had wanted to buy some "big items" -- better home
appliances or furniture for this year's Spring Festival -- but found he could
just afford new clothes for his child.
China rolled out a nationwide scheme on Sunday to
offer farmers a 13-percent rebate on home appliances such as color TVs,
refrigerators, mobile phones and washing machines.
The government's efforts will be hampered further by
an inevitable economic trend toward less labor-dependent capital and
technology-intensive industries, says Wen.
"That is the key problem," he says, noting the most
effective solution is to sharply increase rural subsidies and investment.
The government spent 595.6 billion yuan in boosting
rural development and incomes in 2008, up 37.9 percent from 2007, but Wen says
there remains "a large scope" considering the proportion of rural population.
Tang suggests speeding up reforms to give migrant
workers the same welfare as urban residents and improve the rural social
security net as ways to ease their financial burdens.
The most urgent task, however, is to tackle
unemployment. The government is urging companies to avoid layoffs if at all
possible and employ more migrants in public works projects.
Authorities in Guangdong, Sichuan and Henan have
offered subsidized or free skills training to unemployed migrants since
December. Cheap loans and tax breaks are promised to migrants who start their
own businesses.
It brings some hope to Wang Xiaodong, who was laid
off in Shanghai last year and received cullinary training at home in Anhui
Province.
Waiting for a train back to Shanghai after the New
Year, he says he plans to open a small restaurant on the city's outskirts with
some friends, but still feels uncertain when talking about the future.
"I have to turn to others for help in almost all
matters, such as applying for licenses. If I can eke out a living in the first
year, I'll be content," he said. (Chinese media local reporter Jiang Yi also
contributed to the story)
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