Wednesday, 19 December 2012

China – an economic miracle built on sadness

by Gabriele Koehler

China is admired as an economic miracle: it has produced double-digit GDP growth every year, for the past decade, and achieved the Millennium Development Goal of halving poverty (measured at 1.25$ per person per day, PPP) ahead of time. In fact, given China´s population size, its progress on economic poverty alleviation has enabled the international development community to celebrate the achievement of its Millennium Development poverty goal, set for 2015, in 2010. Over the past decades, China has completely restructured its economy, raising rural and manufacturing productivities, and positioning itself as a leading global exporter.

But: there are many buts. Despite the country’s enormous economic growth, circa 200 million people in China remain under the $1.25 poverty line – which is, after all, extreme poverty, in a country that had once vowed to eradicate all poverty and class differences. Income inequality has increased visibly; statistically, the Gini coefficient is now around .48, compared to less than 0.3 in 1978.
While the high-powered well-heeled upper income quintiles enjoy a cosmopolitan life style, manual workers in rural areas and urban agglomerations are losing out. In the hutongs (old districts) of Beijing, for example, the simple one-storey courtyard flats lack any family privacy and have no plumbing or proper heating.

The Chinese economic miracle is largely owed to the approximately 250 million labour migrants. As has been well-documented, migrant workers in the special economic zones have only recently begun claiming decent wages after years of massive under-payment and dire work and living conditions. They still have no right to remain in the cities once their employment ends, because of the registration (hukou) system which ties a citizen to their place of birth.

China's children  
One less-reported facet of China’s economic miracle, directly related to migration, is the increasingly complex situation of children. On the one hand, stunting (low height-for-age) which is an outcome of chronic malnutrition, decreased from 33 per cent in 1990 to 11 per cent in 2005;  for urban children, it  dropped from 9 per cent in 1990 to 3 per cent in 2005, and among rural children from 41 per cent to 13 per cent. This is one strong indicator that children’s situations have improved – materially. The success can be attributed to a combination of improved health, water and sanitation, as well as to the higher rural incomes resulting from migrants´ remittances to their home towns and villages.

On the other hand, emotional deprivations are intensifying. Recently released data suggest that more than 25% of the country’s children are affected by migration. An estimated 55 million children are “left behind”: one or both parents work and live in another location. The child is left in the care of relatives, usually the paternal grandparents. The number of such children more than doubled between the year 2000 and 2008 – the years of enormous GDP growth. (see graph). Another 27 million children are migrants, accompanying their parents or migrating on their own.

These children are, on average,  better off financially than preceding generations. But equally importantly, they are affected by the absence of their parents, and often develop a severe sense of loss. Moreover, most are single children because of China’s draconian one-child policy. These are emotionally stunted, lonely childhoods.

Legislation for equality
China now needs to equalise its economic accomplishments. Several governmental efforts for this are underway. In the economic domain, they include wage increases and new regulations on limiting weekly working hours. They include policies, such as the “Go West” initiative in place for a decade now,  to attract domestic and foreign investment to the inner provinces so that jobs would travel to people rather than people having to migrate for jobs. There are job creation strategies, such as new types of “industrial parks”  which nurture the lucrative, professionally rewarding and less draining creative industries – IT, consumer goods design, the arts.

In the social policy domain, there is a minimum income guarantee allowance (dibao), and an effort to introduce universal health insurance. The registration (hukou) system is under review, so that urban health and education facilities might become accessible for the families of migrants; and there is also some reflection on liberalising the one child policy. Child poverty, acknowledged as distinct from adults’ poverty, is incorporated into the National Rural Poverty Reduction Strategy 2011-2020.
Both in policy circles and the country’s many impressive research centres, there is increasing recognition of the need to urgently address income poverty, in terms of population under the poverty line, as well as the growing differences between the richest and the poorest in terms of incomes and assets.

However, China’s main policy orientation  is still towards  “more growth”, with an ambition to  double per capita income by 2020, compared to 2010 levels (Hu Jintao statement at the November 2012 Communist  party congress). This will not solve China’s problems. What is needed is radical income and wealth redistribution. What is needed is transparency, political participation and open debate, and the guarantee of human rights (apart from Amnesty International or Human Rights Watch reports, see Liao Yiwu´s interviews with activists from the  1989 Tian An Men. And what is needed is an environment where it is economically viable, and socially the norm, that children grow up in the care of their parents. In other words, it is imperative that economic growth is not bought with a young child’s sadness.

Gabriele Koehler is a visiting research fellow at the Institute of Development Studies.