The Wire China: Scott Rozelle on China's Rural Problem
In this article by the Wire Scott Rozelle, SCCEI Co-Director and development economist, talks about the middle income trap, educating China's children, and why we should all want China's economy to succeed.
This article was originally published in The Wire China on June 20, 2021. You can see the full article here.
Q: In your book, Invisible China, you paint a stark portrait of rural China and those left behind in the country’s economic boom, and you offer some dire warnings about the consequences of such a large and potentially growing underclass. Can you tell us how and why they’ve been left behind?
A: Well, China has 1.4 billion people, and nearly 70 percent of them are rural. That’s more than 900 million people. That means one out of nine people in the world is from rural China. They’re factory and construction workers. They’re in the informal service sector. They’re the ones who sweep the streets and collect the garbage and deliver the packages to the door and open little stores and sit on the curbside and hawk apples and plums.
The ironic thing is that even though there are so many of them, in many ways they are invisible to the outside world. They mostly live in villages in central and western China, which is a separate world from the cities that we see on CNN or read about in The New York Times. They have to send their kids to rural schools in their own remote local counties. They get their health care in home counties.
In fact, in a number of ways it’s very much like the United States. We have 40,000 school districts in the United States. China has 40,000 school districts. All the school districts in the U.S. are funded by local property taxes. So if you’re rich, like Palo Alto [California] or Cambridge [Mass.], you have lots of resources to invest in your schools. About the only people they hire as new teachers at Palo Alto High School have PhDs. But if you’re in Fresno, California, or in the Appalachians or Mississippi, property taxes are really low, so the localities cannot afford to have very good schools.
The same thing happens in China. Schools are supported by local fiscal resources, which in rural counties are terribly scarce. So you’ve got this system where there’s really two castes: a rural caste and an urban caste. You can move from rural to urban if you get a college degree but that tends to be very hard.
In fact, China has some of the highest rates of inequality in the world. And yet many of these people will say, “I’m much better off than my parents were…” And until now, this has sort of allowed them to buy into the system. There is also a long-held belief that the progress of the past will continue; that they will be better off 10 years from now. This is the China dream.
But if some of those people at the bottom begin to lose hope that the future will be better — and, if they see the lives of others, meanwhile, continuing to improve — you could start to have the emergence of a polarized society where wages for those in the lower income strata start to top off or even fall, and their employment prospects also fall. People could begin to say, “I don’t know what my life is going to be like 10 years from now.”
That’s what I try to address in the book; precisely that danger. It’s not a 100 percent certainty that the economy is going to unfold in that way, but if polarization does begin to emerge, hope for a better life would begin to fade for a large segment of society. And if it is going to happen, it is likely to begin to unfold now, since this often happens when a nation tries to go from an upper middle income society to a high income one; the nature of jobs change and the nature of opportunities in high-skilled economies changes.
Read the full Q&A.