By: David A. Smith
As we saw yesterday, Bo Xilai’s assumption of control over Chongqing municipality was certainly eventful: in barely five years he inaugurated the largest anti-corruption trials in China’s history, swept into jail many people who thought themselves untouchable, introduced a dramatic three-part urbanization reform program, and himself was arrested, tried, and convicted of conspiracy to murder, events over which the Economist (March 26, 2016) glided with diplomatic serenity, perhaps as a tawdry distraction from the story the author wanted to tell, about the enduring impact of Mr. Bo’s triad of changes, which sought to leapfrog Chongqing ahead of other Chinese cities:
You’ve got my back, don’t you Wang?
The reforms are unique in scale and coherence.
By providing housing, they aim to attract migrants and thus expand the urban labor force.
By offering migrants better access to public services they aim to make life in cities fairer and thus more stable.
By introducing a land market, they hope that migrants will arrive with cash in hand.
Each of these elements is worth examination in detail.
C. Point 1, Urbanize people
You cannot grow technology; without technology, you cannot consume and deploy energy at scale; and without energy at scale, you cannot have a rich (or even twenty-first century middle class) society. Urbanization is the future, and China knows it – not just the Party leadership but even more so, the Chinese people:
Some 250m people have moved from the countryside to cities, the greatest migration in history. Millions live in dormitories or doss down where they can.
They’re called the ‘ant tribes.
In the midst of ‘plenty’?
In China, as in America, the university degree is no guarantee of a good job:
Most have no formal contracts with their employers, and are denied access to urban public services such as subsidized education and health care.
That’s the hukou discrimination at work. And the reasons for its perpetuation include economic:
The Chinese Academy of Social Sciences calculates that it costs about 100,000 yuan [$15,000] (in total) to provide schooling, health care and other benefits for each rural migrant who becomes eligible to use urban services.
Free …but not costless: school children in southwest Chongqing municipality
For every 1m migrants, that means another 100 billion yuan [$16 billion].
[Editor’s note: It’s unclear whether that’s per-year or a net present value over a lifetime, and I lack the Chinese language or expertise to find out. – Ed.]
Around 12m of Chongqing’s residents are villagers; another 18m live in the core city and other widely scattered towns. As elsewhere in China, the urban population has been growing fast thanks to a rapid influx of migrants (some are pictured).
Perching or nesting?
Even so, most who come are glad they did:
“I like it here,” says Zhang Xiaojie, as she surveys the crowds scurrying below her spick-and-span apartment. Migrant workers bend under sacks of flour or lug around huge circular saws for use on the building sites where they work.
Cultural institution or untenured indenture?
With that urbanization is coming economic separation, as those without skills, education, or connections fall behind those with some or all:
Ms Zhang, a young information-technology officer, is one of millions of people from the countryside who have flocked for work to Chongqing.
She looks around at a forest of 30-storey tower blocks, all built and run by the local government, and smiles: “It’s a good place to live. The government has done a pretty good job.”
Homes for the future: high-rise blocks outside Chongqing
As elsewhere, where there is more housing, there is more economic growth, in part because the foundational jobs have somewhere to sleep at night.
Chongqing’s reforms have helped its economy.
Rural migrants attracted by cheap housing, health and education have provided a ready supply of labor for the municipality’s fast-growing car- and computer-making industries (Chongqing is the world’s largest maker of laptops).
Indeed, perhaps including the one on which I have been writing this.
Insert Google-blocking chip here
At the same time, change seldom happens simply by edict:
Through no fault of Chongqing’s, distribution of urban has thus fallen far short of the target of 10m.
Around 4m migrants have opted to switch their status since 2010. Most are young and better-educated people: those with the best prospects in the cities and the least inclination to keep a rural bolt hole.
Naturally there is plenty of self-selection. For even with the promised and evident benefits of an urban hukou, the observant herd is still wary:
Yes, our children have all left for the city, but it might just be a fad
Many farmers are reluctant to apply for urban
Before you dismiss their fears as irrational, consider what they have and would be giving up.
By law, as people from the countryside, they are entitled to farm a family plot and to use a piece of land for their housing. Most farmers jealously guard that right: they see it as a form of insurance should they fail to make ends meet in the cities.
The farmer’s right to occupy and work a piece of land, title or documents be damned, dates back through history with rights that are common-law, traditional, or tribal.
They fear it would mean having to give up these rights.
I think it certainly would entail a swap of rights: urban for rural, so to embrace the new urban hukou requires bushels of trust: trust in government (and China’s government does little to engender trust), trust in the fruits of urbanization (which may be evident for the young and connected but far less certain for everyone else, and trust in oneself to adapt to a new place. No wonder not everybody is leaping at the chance.
How are you at growing concrete?
To motivate the observant herd, Mr. Bo and his Chongqing colleagues used a classic strategy – give the early adopters a bonus cookie:
To calm migrants’ fears about taking urban , Chongqing has offered concessions.
1. It has granted farmers who apply for it a three-year grace period during which they may change their minds.
2. It has also allowed new holders of urban to retain their farming rights – certainly the best of both worlds.
I have no idea how Mr. Bo sold this to his then-superiors in Beijing, because it’s so revolutionary in that it treated the rural farmers as an equal constituency, indeed people that had to be trusted by government before they could be expected to give government their trust. Perhaps he just did it, under the guise of ‘introductory offer’, figuring he could succeed and then either ask for forgiveness or be in a strong enough political position not to need it.
Yang Xianlu is a 60-year-old farmer in Wulong county. He says he was offered urban but turned it down. His daughter-in-law and grandson (who work in the main city) have both applied for it, however. If they succeed, he says, the family would have the best of both worlds.
I can be a wholesome fiction today and a complete reality wreck tomorrow: the best of both worlds!
Another problem has been that many migrants still feel a strong sense of attachment to their rural land, even after they move into the cities.
Surrendering the life one has known is not easy.
AHI posts on China’s urbanization and capital
July 28, 2010: Little Chinese nested shoeboxes, the ‘ant tribes’ of urban men
August 23, 2010: Gleefully running up the debts, 2 parts, SOEs and development
October 28, 2011: A little learning is a dangerous thing, 2 parts, hukou and schools
May 2, 2012: Old before rich? 2 parts, China’s gray wave
July 29, 2012: I’m shocked, shocked, kickbacks in property development
August 26, 2012: Suburb stuffing, 2 parts, new ghost high-rise towns
November 14, 2012: Not nice places to live, 2 parts, the shortage of girls
July 22, 2013: China’s runaway money train, 4 parts, out-of-control monetary policy
December 16, 2013: Formula for an instant slum, 5 parts, supply-side urbanization
September 19, 2014: Where the money goes, people will follow, 3 parts, expatriating
February 1, 2016: Yuan to buy American housing?, 4 parts, Chinese buying US assets
March 8, 2016: The fall of China Mae, 3 parts, the likelihood of major overleverage
Turning a rural family into an urban one seems to take about a generation and a half. Elder Mr. Yang will be a countryman to his deathbed, his daughter-in-law will have her heart in the country while her life is in the city, and his grandson will be an urban dweller from birth.
[Continued tomorrow in Part 4.]