[Paleopsych] Slate: Henry Blodget: The Empty Village

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Henry Blodget: The Empty Village - What about the 750 million Chinese who 
aren't getting rich?
http://slate.msn.com/id/2116436/
Posted Friday, April 8, 2005, at 5:14 AM PT

    When I grow up, I'm going to be an investment banker
    After a few days in Shanghai, it is easy to think that China has
    already become the world's leading economic superpower. This illusion
    is not dispelled in Beijing. When I lug my bags from the train station
    to the Grand Hyatt, I walk right by the Lamborghini dealer.

    Of course, as many observers have noted, China is two countries, urban
    and rural, and they are as different as Los Angeles and Appalachia.
    The Appalachian part would have remained theoretical for me, but one
    morning I was invited to ride shotgun in a dusty Jeep Cherokee with
    Tim Clissold, the author of [24]Mr. China, for a drive to the north.

    Statistics in China are easy to come by and hard to have faith in. But
    here goes: About 750 million Chinese are farmers, and about 85 million
    make less than $75 a year. The average rural per-capita income in
    Sichuan province in 2002 was $253, less than the fees required to
    attend a local middle school. Rural incomes have almost doubled since
    the mid-1990s, but taxes have jumped four to five times. (To register
    to get married, for example, you have to pay 14 taxes.)

    Of course, poverty alone doesn't lead to social unrest, which many
    people cite as one of the biggest threats to the Chinese economic
    miracle (the others being overinvestment and a fistfight with Taiwan).
    To trigger the class riots that frequently occur in China these days,
    you also need a sense of unfairness. There is plenty of that, stemming
    from corruption, limited opportunities, and income inequality. Experts
    disagree about exactly how China's rural/urban income gap compares
    with that of other countries, but the dispute is confined to whether
    it is the most extreme in the world or merely extreme. In an
    extraordinary series in the New York Times, Joseph Kahn told the story
    of Zheng Qingming, a brilliant farmer boy who aced his high-school
    admission test but couldn't scratch together the $80 necessary to take
    the college entrance exam--and solved the problem by stepping in front
    of an express train. In [27]China, Inc., Ted Fishman described a
    villager, who, after demanding that the spending of local authorities
    be publicly audited, was taken into custody and beaten to death.

    Clissold and I drove until the city's superhighways narrowed to
    single-lane strips and brown mountains appeared. Then, after winding
    through a dusty town near the Ming Tombs, we parked near a cluster of
    stuccoed brick buildings and walked. Compared to the poorer parts of
    China, of course, the village was well-off. Beijing money flows out of
    the city into the surrounding towns, and many of the brick buildings
    here had been recently rebuilt. The village's inhabitants, meanwhile,
    flow the other way, so the town was deserted except for old people,
    dogs, and kids. The town's dirt lanes were strewn with burned coal ash
    and garbage, the air smelled of brush smoke, and an ancient farmer
    pedaled by occasionally on a bicycle overloaded with sticks. We hiked
    through a field into a walled, unkempt area--the grave of an emperor's
    concubine--then up the side of a hill. From there, we could see across
    the valley to an incongruous, nearly flat, snow-covered field, which
    was apparently a ski area. Now that they have some money, Clissold
    explained, the Chinese want to do things people with money do, such as
    skiing and golf. Unfortunately, equipment and skills have yet to catch
    up with desire, so the broken-leg-repair industry is burgeoning, too.

    Later, we drove northeast, past an abandoned reservoir project and a
    military base inside a hollowed-out mountain, and stopped at an empty
    roadside restaurant for lunch. The menu promised a veritable banquet
    of foods, but after a long exchange with the excited waitress
    (Customers! Laowai!), Clissold reported that the only ingredients in
    the larder were potatoes, chicken, and celery. Then it was another 45
    minutes in the Jeep up and down steep hillsides and through tunnels
    until a familiar ribbon of stone appeared on a distant ridgeline,
    snaking away as far as we could see. Richard Nixon will forever be
    ridiculed for his assessment of this architectural wonder, but he got
    it right: "It sure is a great wall." In fact, when one imagines the
    labor required merely to haul the massive rocks up to the ridge, let
    alone carve and fit them into place, it's no wonder people have such
    respect for the awesome power of the Chinese workforce.

    Fearful that social unrest will weaken its power--and also because it
    is the right thing to do--the Chinese government is aggressively
    addressing the income gap. The answer, for now, is not more-efficient
    farming but easier migration to cities and the establishment of ever
    more factories. Like other governments, however, the party is not a
    single unified entity, and intelligent reforms in Beijing can often be
    negated by local officials in the countryside. Creating jobs for a
    billion people, moreover, does not happen overnight. Even with China's
    frantic rate of growth, the lack of rural opportunities and the death
    of many state-run enterprises have resulted in mass unemployment.
    Fishman suggests that China may have more unemployed industrial
    workers than the rest of the world combined.

    Which is why, when one has seen the other side of the coin, it is even
    harder to wave the pompoms in support of U.S. protectionist rhetoric
    aimed at whipping up fear of the "China threat" and saving "our" jobs.
    It's easy to have sympathy for those whose jobs disappear across the
    Pacific, but hard not to also feel excited about the opportunities
    created for millions of Chinese so desperate to have them. As Thomas
    Friedman observes unapologetically in a recent New York Times[28]
    piece, like it or not, the world has changed, and globalization is
    here to stay. If we fail to react, or resort to whining instead of
    innovating, China will indeed prove a massive threat (and might
    regardless). But ultimately, the answer is not tariffs, quotas, or
    safeguards, but figuring out what we can do better than the
    Chinese--or with their cooperation. And then helping our companies and
    workers get on with it.

    Henry Blodget, a former securities analyst, lives in New York City.

References

   24. http://www.amazon.com/exec/obidos/tg/detail/-/0060761393/qid=1112909800/sr=8-1/ref=pd_csp_1/103-9856978-8440619?v=glance&s=books&n=507846