[Paleopsych] Slate: Henry Blodget: The Empty Village
checker at panix.com
Mon Apr 18 17:18:07 UTC 2005
Henry Blodget: The Empty Village - What about the 750 million Chinese who
aren't getting rich?
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 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 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
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.
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