The Chinese Economy—A Ground Floor View

The Chinese Economy—A Ground Floor View

In spite of some setbacks due to lagging demand in the US for Chinese exports and the bad weather in February, the Chinese economy still seems to be chugging fairly well. But what do all the figures in the New York Times mean here on the ground in hinterland China?

Whether locally or nationally, it's sometimes hard to know if there really is a plan here or if things are just addressed on the squeakiest wheel principle. In spite of a fair amount of evidence for the latter, based on what happens and what doesn't I think it's fairly safe to say that there is plan. Of course, there is a public plan and it's on the big bulletin board near the campus entrance across from the administration building. That one is the summary of last fall's 17th National Party Congress and it's all about scientific development and the construction of a harmonious society. But that's the kind of thing you'd hear at a State of the Union message too. I'm talking about the real plan.

From what I can see the real plan is to continue to maximize the capacity of the country to industrialize and produce products for export in order to maximize the inflow of capital—as much and as long as possible until it just can't continue any longer for whatever reason be it world recession, internal strife, a total crash of the US economy, or China's finally being undercut by some other low wage producer. I think one can come to this conclusion not just by what's being done but just as much as by what's not being done in other sectors of the ecnomy and society.

I can't say I've seen a rush of new factories going up in and around Xinxiang, but there are lots of them of recent construction. Furthermore, everywhere on the edge of our end of town there are new 4 and 6-lane concrete roads going off into the countryside with some factories at the near end and space for many, many more. It's not unlike many places you can see in the US that are earmarked for low or tax free industrial development. We have such a place right near the airport in my hometown of Duluth with those same kinds of roads with names like Prosperity Lane that go right off into the woods. Most new construction here in Xinxiang is for residential housing and new spaces for mom and pop businesses on the ground floors of these large residential complexes. Although there are large ddowntown department stores, as in Japan, it's in these little neighborhood shops where the vast majority people buy their noodles, their shoes and their beer. As the residences fill up so do the shop rentals on the ground floors and even in my six months here I've been able to mark the progression.

However, the things that are not being done to curb pollution, improve living conditions in the countryside, and improve the rural health care system are indicators that the focus in these areas is on stopgap measures and not serious attempts to find final solutions to these problems. Incremental improvements in these areas are being made, but they take second place to industrialization and the export economy.

In fact, the situation in the countryside seems almost consciously designed to get more and more people off the land and on to the shop floor. As to the countryside surrounding Xinxiang, it was stated in the local paper that getting people away from earning their living on small pieces of land was the best way to reduce poverty. The paper refers to a study of 390 households which were part of a proverty reduction plan stretching over 3 years. According to their statistics, the incomes of those who were involved in work outside the village or were self-employed made up more than 30% of the total rural village income. It is forecast that for 2008 such families will constitute 43.5% of the village income. It is not stated directly, but this contract labor almost certainly consists of going to the city for day labor construction work and the like. In any case, due to the success of this plan "party committees and government of the various counties and townships attach great importance to the work of the transfer of agricultural labor." (PingYuan Wan Bao 2/15/08) An important thing to note, however, is that the villages in question are part of the same political entity of the city of 650,000, so it's easier for these workers to do day labor or stay in the city for short periods of time without being very far from their families. These options don't exist for rural people who are farther from urban labor markets. Those people must make the difficult choice of leaving their families for long periods of time or continuing to live in relative poverty.

While things have been done to ease the difficulty of rural life, like instituting a very minimal basic rural health care plan and eliminating tuition for junior high school education, the changes border on insignificance. The rural-urban gap remains huge and I can see the transition even as I bicycle out of the city to the adjacent villages and then to those an hour or so away where they grow basic grains and don't have access to the urban vegetable markets. Another indication is that just a quick ride through rural villages shows that it's overwhelmingly old people who are out in the fields. If one could make a good living staying on the land, more young people would choose to do it.

Of course, China is only one of the more recent countries to go through such a transition. The interesting thing is the extent to which it becomes part of a conscious plan on the part of government or a more natural and gradual shift. In Japan, from about the 1870s the government raised land taxes, forced many peasants off the land and and gave them no other recourse but to head for low wage urban factories as the government got its export industry going with textiles. Rural samurai also turned in their swords for suits and briefcases and headed for town. The basic class relations continued in a different venue. Now other carrots and sticks are being used in China now to accomplish the same ends.

Continuing the expansion of industry is clearly a much higher priority than cleaning up the environment as well. For sure good things are being done and some progress is being made, particularly with the use of electric bicycles and new low emissions public transportation in the cities. However, coal burning to produce electricity for industry continues to grow though some reports say that coal pollution is actually decling only to be replaced by auto emissions. The air is generally better now than when I came here for 2 months in the spring of 2001 at the time of the grain harvest when farmers burn the stubble. However, there are still plenty of bad days and weird smells in the air at times especially at night when most people don't go out to notice. I found it interesting that last fall there was a "no car day" in some parts of the city. The 8 column inches or so in the local paper devoted to it contrasted sharply with a full-page report of the annual auto exposition in Guangzhou complete with pictures of the requiste number of women draped over cars.

Pollution of rivers is even worse and an even clearer indication of where priorities lie. My students are writing on pollution problems this semester, and student after student has reported how the rivers in her/his towns and villages where they used to swim and fish as young children have become smelly lifeless black flowages just in the last 10 to 15 years. Right here in town I can walk to the place where the local river turns from a semi-transparent light green to totally smelly black after it passes a point where in very plain view a culvert empties into it and totally changes the character of the river. The origin is unknown to me, but it would be very easy to find it if someone wanted to. Fixing it, however, is apparently less important than something else, that something else probably being more and more profitable production of goods for sale domestically and internationally. The fact that some of the profit does get routed to stopgap measures to silence the squeakiest wheels does not detract from the obviousness of the main priority.

I can add some details and examples on a more individual basis. The other day I went to have some 泡馍羊肉 at a mom and pop street side establishment. The name of this dish rather defies direct translation, but it's a favorite in western Muslim regions where mutton is the main meat. In fact there's very little meat in it; it consists of mutton broth, a little parsley and chips of heavy bread that soak up the broth. In short, it's a cheap dish that kills the hunger and sticks to the ribs. This place happened to be popular with employees of Fresh Tech (新飞), one of the biggest employers in Xinxiang, just a block or so away. Not surprisingly one of the main arteries in town is named after the company as well. I was able to have some conversation with two fellows that were finishing their lunch at the next table. The conversation stated with the inevitable question about my salary and I told them that I get 5000 rmb (about $650 USD) per month. At first they thought maybe I was getting $5000 USD per month, but when they found out is was indeed rmb they said it was 不多, "not much." I hastened to agree.

As it was Saturday, they were off work. They are factory workers in this establishment that makes freon free "green" refrigerators and freezers. Their characterized jobs as 中等, kind of ok jobs. They make about 1000 rmb per month (about $140 USD). Interestingly that's the number I was told by someone when I was here 6 years ago too. At that time Fresh Tech jobs were considered desriable and either things have not gotten better for those workers over the years or I was misinformed by someone who didn't have information straight from the horse's mouth as I was getting now.

The factory employs about 15,000 people and its products are virtually all for export to East Asia—very few to Europe or elsewhere according to my infomants. They work regular 5-day weeks, but it's likely that with new fast assembly line techniques their employers get a lot for their $140 per month (the cost of one refrigerator?!). The company is now owned by someone in Singapore though I was once informed that the company was originally German. In any case the place seems to be doing well enough because I walk past there now and then and there are always flat bed semi-tractor traliers full of refrigerators and freezers going out. I once saw a group of large residential high rises south of town with the Fresh Tech name on it and these fellows told me that anyone could buy those flats but they were built by the company and were cheaper for employees. I neglected to ask about health insurance, but most urban work units have decent insurance policies compared to rural and temp workers, so the housing option and health care serve to agument the just ok salaries. Outside of town my bicycle wanderings brought me across another Fresh Tech operation—a factory that makes electric bicycles. It was not nearly as big as the refrigerator operation, but it seems that the company has its foot in the door of another potentially lucrative business, this one for domestic as well as international consumption. (An electric bicycke might cost a couple months' salary.) In another place south of downtown there is another huge Fresh Tech Group building and not far from it a block square empty lot that is surrounded by a wall with "Fresh Tech Electric Bicycles" on every inch of wall space. Perhaps it is the site of a future factory.

The cheap lunch these two guiys had on their day off illustrates another very important point—the economic multiplier effect of their work for the countless mom and pop operations mentioned earlier. So far so good even in spite of serious inflation in the past year, particularly in the past months. As a single party government running a capitalist state, the folks in Beijing have more levers to pull quickly if needed. It may surprise readers to know that they still have the confidence of a very sizeable segment of the population when it comes to delivering propserity, but undoubtedly it could still turn out to be a very bumpy road.

The two Fresh Tech employees were having a beer with their lunch and offered me the customary social cigarettes, but I had the good sense to refuse. I really wanted the beer, but I still had an afternoon of paper correcting to do. As for the cigarettes, I probably got a good half pack worth of whatever into my lungs during the 15 minute walk from my apartment, so no loss there.

Back on campus on Friday and Saturday, there was another interesting bit of economic activity going on. The school was having a job fair for spring graduates and there was much hoopla and many banners to advertise it. As it was happening pretty much right outside the foreign teachers' residence, I went out to have a look. Probably in the two days of the fair some thousand or more people were milling around squinting at the posters that were hung everywhere on the walls and fences around the guest house which was the center of the fair. Some were very professionally done and some looked like big-character posters form the 60s and 70s. Maybe half of the onlookers were younger undergrads just courious about the job scene, but others were very serious looking suited up individuals writing down the names and phone numbers of contacts or punching them into their cell phones. Some were accompanied by helpful parents—probably those with some education and experience. There were also visiting school bureaucrats (virtually all male) here and there, but most of them were probably in the guest house meeting rooms conducting interviews At the end of the day on Saturday they filed out to get into their cars and drive home.

This is a teachers college though for sure half or more of my students have no interest whatsoever in being teachers. Afterall they are not foolish. Nevertheless, representatives had come from many parts of the province, some of which I was familiar with and some of which were little backwater places I'd never heard of. Most of the posters didn't give much in the way of details beyond what kind of positions needed to be filled. There were ads for primary school teachers to Ph.D.s in high tech fields, but most were for junior and senior high school. I suppose some students were looking for a position close to their home towns and parents while others for sure want to get the hell as far away as possible, but those are the ones uninterested in teaching too. The biggest demand seemed to be for foreign language teachers, specifically English teachers. Next was Chinese language and after that a smattering of biology, physics, geography, etc. In many if not most cases thre was as much need for English teaches as all other positions combined, certainly more than any other single field. This interest in foreign language stands in stark contrast to the situation in the United States, where serious investment in foreign language study has maybe never been at a lower ebb.

One technical college was hiring Ph.D.s and M.A.s in various technical fields and was paying up to 100,000 rmb per year, about twice what I'm making here teaching English as a foreigner with a Ph.D. These positions had lots of other benefits too like computers, housing assistance and moving allowances. There were also ads for a Moslem school, not an uncommon thing at all in any part of China. There was also a bilingual school (双语) though this was probably just a school that taught two languages in parallel, the usual situation here. They were hiring at all levels from primary school to senior high. The salaries were 20,000 rmb for primary school and 25,000 or even up to 50,000 for senior high, so even the primary school teachers at this particular place were making nearly double the salary of the Fresh Tech factory workers. It's likely however, that this school advertised its salaries because they were more competitive, and for the same reason perhaps others intentionally omitted this information. Everyone agrees that teachers are underpaid, and not just in China, but as in other lines of work the rural-urban gap is the biggest factor.

Even this cursory and localized acount of economic conditions in China shows what a large and unwieldly animal is at the end of the tether that the CCP is trying to tame in the face of many, many other challengers. The big numbers don't tell half the story and no one is telling the whole story if indeed anyone can.