Scholar: Sadezia Ulcena

Under Guidance of: Hung-Yi Erik Shen, St. John’s University

ASC 4953: Research

The 1st Quarter 21st Century Future of Rural Chinese Society

Introduction

Rural China is one of the largest rural populations on the planet. With the People’s
Republic of China having a total population of 1.3 billion, the rural population makes up 572
million of that. This population is expected to increase with the rate of births yet decrease due to
the adult attraction to urban areas. The draw to the cities is so great that many rural farmer
classes leave their families, homes, and lives behind for opportunities as migrant workers. The
times of closed agricultural communes and Hu Jintao, 6th General Secretary of the Communist
Party, in leading reform for struggling populations, decided to be the first Chinese leader to
cancel the agricultural tax since feudal times, have allowed the Chinese rural population to thrive
more than once before, however how the rural population will advance in the future remains to
be seen.

This paper will study some of the factors affecting rural China economic development. It
will offer some insight into history but will be primarily policy and financial based. It will
analyze the trends and motivations of those currently investing and/ or taking activity in rural
China and what potential hazards there are to this market. It will also analyze some possible
steps that can be taken to revitalizing this market so that there is a smaller disparity between
urban China and rural China in terms of purchasing power and job opportunities. One of the
biggest topics of analysis will be government plan and action as a factor in development,
primarily with the Communist Party of China’s 13th 5 Year Plan under General Secretary Xi
Jinping.

This paper will be broken into three sections:

1. A Portrait of Rural Life

2. Government’s Plan for Rural Society
3. Key Growth Opportunities

U l c e n a P a g e 1 | 11
 1.Portrait of Rural Life

The current GDP gap is known to be wide between rural and urban populations. Though
decreasing, for the 2010s urban income has steadied around 275- 330% more than rural per
capita income (The Chinese Urban and Rural per Capita Income and Trend Analysis 2013). The
primary reason for the increase is not due to improved job opportunities and wage increase
within the rural societies themselves but due to the migrant workers of rural household
registrations or hukous whom send money to their rural residents. These migrant workers will
spend most of the year working for comparatively low wages in urban settings often in low
skilled work or industrial factories. They will share small apartments and some, but not all will
send their wages back to their rural homes. It is hard enough for them to be able to be residents
of the cities, it is even harder to get their support their families to live with them in the urban
restraints. No matter how long they spend in the cities, those whom hold hukous in a rural town
are considered temporary residents of the urban cities and will never be granted some of the
same government benefits like insurance, healthcare, and education. It is extremely difficult to
change hukous so those living in the cities must struggle, but the struggle may not compare to the
struggle of living in a rural setting.

Most whom live in rural areas are still in poverty and lack proper sanitation. They are
often bided by cult religions that are opposed by the state like the Fa Lun Gong or religions that
have spread so much they worry the state like Christianity, since state reutilization of
Confucianism as a cultural binder only started in the early 2000s under Hu JinTao (p.7 From
Communism to Confucianism). With a lack of young and working aged people these sources of
extra support can prey on the community in the government’s eyes. Since there are little people
residing in rural areas in their 20s to 50s, ages of prime vigor to carry out heavy duty tasks there
is also a lack of prime labor force and a lack of care for aging populations. Oftentimes the elderly
grandparents will watch the too young to do proper work grandchildren depending on the rest of
the community for help. Oftentimes mothers will live alone with their children or even children
will live amongst themselves with the oldest child taking responsibility until parents return. With
a lack of workforce, it can be difficult for those whose working family members have left them
behind to farm up enough to eat even with money being sent. This is why rural areas still make
up the most of China’s poverty.

Yilong Lu notes that to truly increase the worker affluence and income level for rural
peoples there needs to be less agricultural jobs.

“if the annual reduction of agricultural labor were 3%, then in 2030, the population
engaged in agricultural jobs would be around 100 million, accounting for 10% of China’s entire
working population. This would narrow the gap of income between urban and rural residents,
and really allow farmers to share the fruits of economic growth. So, how can China reduce its

U l c e n a P a g e 2 | 11
agricultural labor by 3% each year? Macroscopically, each year, its urban areas should create 7.5
million nonagricultural jobs for the rural labor force and absorb 15 million rural migrants.” (p.48
Rural Development in China)

In a rural household, unless in a coastal rural area, the primary engagement is still
farming and agricultural works. Self- subsistence is the name of the game, however since
China’s expansion of market in the late 70s there has been increased consumerism and work
beyond just agriculture. The rural areas once having little to no access to electricity, water,
telecommunications, foreign imports, or advanced agricultural technology have since been
mechanized and seen increases in all of these sectors. Access to more has somewhat added to
new opportunities for rural areas with “The percentage of the non agricultural industry labor
force in the total rural labor force increased from 9.2% in 1978 to 32.5% in 2008” (p.31 of China
environment and Development Review). However, even with all of these added features rural
life is difficult. Education is poor and compulsory education ends early leading to a lack of place
to gain transferable skills in the workforce, most healthcare in rural areas, though subsidized by
the government, is limited, there is corruption and petty crime due to lack of police force and
misallocation of funds, and the environment is increasingly degrading from pollution.

On the note of pollution, the CPC recognized in 2013 that 4/5 of water, mostly surface
water, was unfit for bathing or drinking due to farming or industrial waste. Most pollutants from
the cities are shipped off to rural areas and dumped into landfills. Much of the waste is still wet
and organic so it can’t be incinerated like high plastic, high paper, and other high burnable
materials can. Instead it dirties the air and seeps into the ground, bringing pests and stench to
nearby villagers. In an analysis of waste a rural township, rather than village, near Guangdong
province was observed for levels of morbidity due to electronic wastes.

“Nearly 60–80% of families in the town have engaged in e-waste recycling

operations conducted by small scale family-run workshops, with approximately 100,000
migrant workers employed in processing e-waste. Because the implementation of a clean
and safe high-tech recovery process was very expensive (Allsopp et al. 2006), the
processes and techniques used during the recycling activities in Guiyu were very
primitive. The result was that many tons of e-waste material and process residues were
dumped in workshops, yards, roadsides, open fields, irrigation canals, riverbanks, ponds,
and rivers. Hazardous chemicals can be released from e-wastes through disposal or
recycling processes, threatening the health of local residents. Several studies have
reported the soaring levels of toxic heavy metals and organic contaminants in samples of
dust, soil, river sediment, surface water, and groundwater of Guiyu.” (Recycling E-
Wastes)

U l c e n a P a g e 3 | 11
 81.8% of Guiyu children were found to have high blood lead levels. In areas of more
organized township governments like in Guiyu the work is better industrialized and provides
higher wages however it is often hard and unsafe. Guiyu residents and many other rural areas
still use coal rather than gas fueled fires, which is less clean and highly toxic to the lungs, for
their daily work and living activities. The workers gain little transferable skills from the tasks put
in front of them in an often industrial line setting. Recycling like this, though a new and booming
industry for rural workers, is dangerous and still inefficient in the large scale of the amount of
waste in China.

Rural farm work also causes pollution to rural domestics due to lack of education;
farmers put sewage in water before it is bioprocessed into safe conditions. China Environment
and Development Review mentioned one cause of the pollution was also due to farm runoff
where nitrogen and phosphorus runoff causes prime eutrophication for algal bloom and inorganic
pesticides, as they build up in the land from runoff, are a threat for human toxicity for future
agriculture and in water sources as bad as the use of DDT was in the 1960s. It also mentioned
that the majority of rural people still use latrines, cesspits, or portable toilets for their organic
waste rather than flushing toilets or even compost. The book mentions that historically
infrastructure of public goods was based on rurals supplying not demanding so there aren’t many
public goods like garbage disposal industries, sewage treatment, nor health facilities provided to
them. It mentions that there is current CPC funding for public goods, even so “In reality, there is
no stable and reliable capital source for the construction and operation of of rural water supply
and discharge facilities” (p.44 China Environment and Development Review). Most of the
township enterprises focus on environmental conservancy rather than remediation and some
siphon government funds given so farmers do not often get a say in the subsidy allocation.

So what does the government plan to do about this lack of opportunity?

2.Government’s Plan for Rural Society

In a documentary titled by “China Urbanisation Migration and Related Issues”, the

government’s intention to create more inland cities to move rural population into was expressed.
In addition to the creation of these cities aiding in the creation of jobs, these cities will harbor
economic activity aiding to a boost of rural income since a widespread demand of workforce in
urban areas has higher wages as compared to farm work. The government also is able to tax
urban dwellers more which leads to more subsidized social services. The increase in urban
population and workforce in smaller areas creates a cycle of attracting businesses. Though rural
populations don’t like giving up their homes when these new inland cities are built and don’t like
the new cheap apartment housing available to them when they have to move inland, when the
ghost cities become populated they tend to enjoy the increase in wages and quality of life in
other aspects that rural life didn’t provide. Inland cities allow rural residents to experience the

U l c e n a P a g e 4 | 11
benefits of urban society without changing their hukou, which benefits government organization.
As long as the influx of businesses and urban dwellers with higher education does not
temporarily displace the work opportunities of rural workers then the inland city model should be
helpful.

The urban dweller being taxed more than rural dweller is new as in the 1990s agricultural
taxes took up much of farmer income and were still partially on quota basis. Township
governments that distributed farmers’ earnings took out portions for themselves in another form
of corruption. It was also unfair and inconvenient to have more land as that would cause higher
agricultural taxes for a household. Farmers were not paid their full earnings. Even today there is
still corruption in township governments in the form of land tenures lease auctions being unfair
and money given to farmers to move off their land as part of it is converted to new cities is
siphoned.

The CPC’s solution to all of this is a new framework of infrastructure, green innovation,
communal entrepreneurship, and protecting those in poverty. In the monthly CPC periodical
Qiushi 求是, former Vice Premier and current 9th Chairman of the Chinese People's Political
Consultative Conference noted that in 2016 in the Central Economic Work Conference General
Secretary Xi Jinping noted that agriculture is no longer a problem of insufficient production, now
the issue just remains of having a properly structured management system and production
technique. Wang then went on to say that the future analysis of effectiveness of good reform
while restructuring the supply side will be a measured increase of rural farmer income. This is a
shift from the past days of Mao Zedong when CPC doctrine was not based off the profit of
individuals in the society, but off of looking well as a developing industrial nation before other
nations. Wang went on to note that there should be government market guidance to exert better
resource allocation to reduce the current ineffective supply of agricultural products.

A large part of what the CPC promotes in the 13th 5 Year plan is based off of the analysis
that China as the largest population in the world is still expected to grow to 1.6 billion and the
primary goal should be self-sustainability of China for China and national food security. They
don’t want a repeat of the food insecurity that turned out to be one of mankind’s greatest losses
of life, The Great Famine. The CPC wants to see this rise in production enacted to empower
farmers out of poverty and to be done environmentally friendly. This plan uses a delicate balance
of communism and private enterprise. In the 13th 5 Year Plan there is more details on the CPC’s
plan. They hope to cap the population with the two-child policy, rather than the prior labor and
gender restrictive one child policy. They do not want to see the population grow to increase
agricultural output as Mao Zedong did when he restricted contraception and urged a greater
population to create more agricultural output per capita. But like before the CPC will start taking
over private farmlands to reorganize into collectives, but this time to avoid the skepticism from
farmers and inefficiency of communes they plan to treat farmers as entrepreneurial shareholders
U l c e n a P a g e 5 | 11
holding stocks in the land they develop on. They also do not want to kill the farmer morale so
they noted that with this push they would recognize that farmers are individual households that
still have a priority to feed themselves so they will keep in mind with all changes the farmer’s
ability to cope with appropriate pace and intensity of demand as well as by respecting farmer’s
decisions and not coercing them. With the joint land use and land transference into shared stock
they hope to lift farmer’s out of property while giving them enough pressure to respond to
current Chinese market demands in quantity and quality. They want to remove the idea of
Chinese goods being cheap quality so that Chinese people are more inclined to buy and respect
domestic goods rather than the imports they are habituated to.

On page 12 of the 13th 5 Year Plan the CPC’s founding concerns and reasons for reform
are summarized.

“The foundations of agriculture are still weak, overcapacity is a serious problem

in certain sectors, commodity housing inventory is high, corporate profits are sliding, and
debt continues to grow. Development is uneven between rural and urban areas and
between regions, spatial development is inefficient, resource constraints grow
increasingly tight, and the continuing trend toward further ecological and environmental
degradation is yet to be fundamentally reversed. The provision of basic public services
remains inadequate, income gaps are wide, population aging is accelerating, and the task
of eradicating poverty is formidable. Major workplace accidents occur frequently, factors
that affect social stability are growing, there is room for improvement in the overall
caliber of the population and the level of civility in society, the level of rule of law has
yet to be raised, and it is becoming tougher to ensure social harmony and stability.”

Based on this the CPC has initiatives in every realm that can be applied to improvement
of Chinese rural and total society. In addition to building up the Belt road for further trad of
Chinese goods the CPC also intends to improve public service systems, modernize and extend
compulsory education, increase the middle class, come to full employment, tap into the rural
potential for consumerism, support new forms of consumption online and offline, improving
property rights, safeguard the right to profit from state capital investments and individual
enterprise, and increase transparency. It also intends to improve the functions of rural collective
and individual housing property rights for all rural areas including those of women, recognition
of collective economic organizations to allow shares to individual properties, create a property
rights system for natural resources, improve process for requisitioning land and for protecting the
interests of the owners of the land. They also intend to try allowing rural owners to use land as
collateral for financing, to improve market-based allocation of land and creation of special zones
per agricultural and industrial product. It claimed they would strengthen rural economics with
development of distribution facilities, better logistics, encouraging e-commerce, developing
specialty agricultural products that are efficient by choosing only suitable land conditions for
U l c e n a P a g e 6 | 11
those products, introducing internet technology into modern agricultural technology for more
efficient work, better quality, better distribution, and better business services even promising 100
mbps to rural areas and 98% hookup to fiberoptic networks for administrative villages with open
international communication network and facilities that include submarine cable infrastructure.
They will also increase the dissemination of information with better transportation and postal
services on all fronts including for rural roads and bridges.

To stop mitigate the poor effects of migration for those with rural hukou the CPC claims
it will make efforts to see that rural residents can settle with their families, gain stable
employment and gain the same rights as urban hukou holders, and while they are in urban lands
that their rural land they lease is not infringed and their housing is built on is not taken, they will
make sure rural students can get similar education as rural students to bring common
development between urban and rural areas. They will improve the housing, drinking water,
lighting, sanitation, power supply, healthcare, prime prevention, and sanitation for those in rural
areas. They will also protect women and children treatment on economic and domestic fronts
while providing left behind rural children with adequate access to childcare. On a final note they
also proclaimed they would protect ethnic minority rural people, yet eliminate “illegitimate
religious activities”

3.Future Development Opportunities

So, what do all of these intended improvements mean for the economic advancement of
rural areas? With the government’s intended increase in public private partnerships and support
of startup incubators there will be an increase in individual enterprise. There has been an issue
with gaining capital but with a market open to private enterprise there are many fields for rural
economies to move in especially if they have access to wider global scopes of support. The CPC
specifically stated they would ease restrictions on foreign market access and proactively look for
foreign financing (p.143 Section 4 5 Year Plan). With the telecommunication and wireless
industries expanding and the government’s initiative to build international communication
networks, this allows foreigners to invest in China’s rural development plan with higher rates of
ease than before. There are great prospects for foreign and Chinese joint ventures that rely on
Chinese agriculture and industry franchise entrepreneurship rather than on the idea of strict
nonprofit communes, or profit decision making townships, which was previously proven
inefficient. The main fields of public private partnership domestically are ecommerce and
tourism; internationally there is an opportunity in recycling of which there is currently a lack of
efficient processing and a large market to serve.
According to Lalin Mui in “China's Rural E-Commerce: The Next Growth Opportunity,”
private domestic enterprises are already taking the lead with Alibaba’s Taobao bolstering rural
development. These large internet trading firms are using internet distribution centers and other
technology powered distribution channels to get goods to rural consumers. And while private
U l c e n a P a g e 7 | 11
enterprises like Taobao handle the e-commerce side the government handles the infrastructure
side, promising the internet broadband backbone for the rural population totaling 44% of the
total population. Nearly every rural household takes advantage of mobile phones in much greater
fervor than they do with landlines. The telecom industry has grown with this mobile expansion
and even offers some capped data plans which increases the opportunities for ecommerce and
public private partnerships in this field.
In an analysis of state only assistance to the creation of jobs there is historical and tourist
site preservation and construction. Lu Yilong sees Xiaogang village as the “face” of rural reform.
In 2016 a total of 710,000 tourists were recorded. (p. 20 Rural Development in China) It is a
tourism startup funded by the CPC, that allows for the villagers and tour operators to handle its
management. Startup incubation like this allows rural economies a guide to see how they can
progress on modern market standards and to expand the economic activity types in their areas.
They are not meant to bring fast money right away but to act as a guiding light as more profit is
brought and the culture of rural business changes. Another government funded front is STEM
and agriculture. Agricultural Science is doing well in China with China’s Agricultural University
being ranked 4th best by US NEWS’s 2019 Best Global Universities for Agricultural Sciences
by Clarivate Analytics and 3 other Chinese Universities taking up spaces in the top ten rankings.
Nanjing Tech University’s College of Biotechnology and Pharmaceutical Engineering just
finished developing a new way to develop waste into gas. Microbial fermentation coculturing
centers will recycle organic/wet waste, which the government has little use for in incineration,
into sterile forms and produce acetone and ethanol in addition to butanol as an after effect. With
innovations like this the past creation of pipelines that carry butane to power the cities can be
revived. Rural economies can be industrial recycling centers instead of only trash centers. With
the waste already currently being transported from the cities to landfills in the rural areas. This
will also help in the 5 Year Plan’s initiative for conversion of coal energy into the cleaner gas
energy as the Communist Party steps into green innovation.
Though the innovation was created in China there is still an area where foreign
knowledge, technology, and capital can assist, especially in recycling. There is a large growth
opportunity. For example, in Songyuan city there is already a projected annual profit near 25
million yuan for manufacturing recycled soap water into glycerin and glycerol for antifreeze,
lubricants, papermaking, humectants, toothpaste, and cosmetics (The Project of 10,000 Tons of
Pharmaceutical Grade Glycerine in Songyuan City). Glycerin is in low domestic supply in
China and an industry opportunity like this would be beneficial for more rural areas. With an
advanced technique of bacterial fermentation domestic glycerin has the ability to become as
good as imported glycerin. Yet there are still some quality and production technique gaps
between imported glycerin and domestic glycerin that a foreign company can help fill. There is
also a large water treatment, recycling, and remediation gap which the government’s proposed
water frugality and conservation won’t solve. In a perfect example of a foreign and domestic
partnership, a company Fluence partnered with Qingshiyuan Environmental Company to build a
U l c e n a P a g e 8 | 11
rural waste water treatment and repackaging plant in Xinjiang, Henan, and Sichuan provinces. It
is estimated to result in $2.6 billion in rural wastewater treatment sales over the next 5 years by
finance journalist Lorna Nichols (Fluence News Team 2018). There are even more opportunities
when private rural enterprises are recognized by foreign companies as key stakeholders in
economic profitability.
In conclusion, though there is still a large gap in the conditions of rural land, the
treatment and rights of rural people, and the economic activity an income available for rural
hukou holders as compared to urban hukou holders; there is an even larger prospect for growth
and innovation. Rural society can improve while taking note in avoiding all the negative effects
of urban industry and its increased pollution. With the CPC’s focus on improving rural
conditions and guiding the quality and process of the nation’s agricultural backbone while
releasing some of the government restrictions on profit, support, and expansion for individuals
there is a bright future ahead for the rural economy.

U l c e n a P a g e 9 | 11
 Works Cited

Yang, Wang. “Advancing Agricultural Supply- Side Structural Reform and Fostering a New
Impetus for Agricultural and Rural Development .” Qiushi 求是, vol. 9, no. 32, ser. 3,
2017. 3.
Weingarth, Steve. Pro Doco. China Urbanisation Migration and Related Issues. Pro Doco,
Kanopy 2016..
The National Development and Reform Commission of the People's Republic of China, and.
Compilation and Translation Bureau, Central Committee of the Communist Party of
China Beijing, China. “The 13th Five-Year Plan For Economic And Social Development
Of The People’s Republic Of China (2016–2020).”, Central Compilation & Translation
Press, 2016.
“The Best Global Universities for Agricultural Sciences, Ranked.” U.S. News & World
Report, 2018, www.usnews.com/education/best-global-universities/agricultural-sciences.
Su, JiAn. Guilin University of Technology. The Chinese Urban and Rural per Capita Income and
Trend Analysis. Scientific Researcher, 2014, pp. 106–109.
Mui, Lalin. “China's Rural E-Commerce: The Next Growth Opportunity.” Seeking Alpha,
Seeking Alpha, 30 Nov. 2016, www.seekingalpha-
com.cdn.ampproject.org/v/s/seekingalpha.com/amp/article/4027279-chinas-rural-e-
commerce-next-growth-opportunity
Lu, Yilong. Rural Development in China : The Rise of Innovative Institutions and Markets.
English edition., English ed., Volume 2 /, Enrich Professional Publishing, 2016.
Kienzle, Josef, et al. Mechanization for Rural Development: A Review of Patterns and Progress
from Around the World. Plant Production and Protection Division, Food and Agriculture
Organization of the United Nations, 2013.
Jun, Jin, and Jiang Mengying, translators. China Environment and Development Review : The
Rural Eco-Environment of China. Edited by Xiao Zhang, China Social Sciences Press,
2016.
Jiang, Yujia, et al. “Microbial Co-Culturing Systems: Butanol Production from Organic Wastes
through Consolidated Bioprocessing.” Applied Microbiology and Biotechnology, vol.
102, no. 13, 2018, pp. 5419–5425., doi:10.1007/s00253-018-8970-0.
Huo, Xia et al. “Elevated Blood Lead Levels of Children in Guiyu, an Electronic Waste
Recycling Town in China.” Environmental Health Perspectives 115.7 (2007): 1113–
1117. PMC. Web. 26 Sept. 2018.
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1913570/
Gao, Xiaobo. “The Project of 10,000 Tons of Pharmaceutical Grade Glycerine in Songyuan City
Jilin Daily” Published by People’s Government of Jilin Province 21 April 2011
http://english.jl.gov.cn/Investment/Opportunities/Industry/MedicineandBiotechnology/20
1104/t20110421_979743.html
U l c e n a P a g e 10 | 11
Fluence News Team. “China's Latest 5-Year Plan Focuses on Green Growth, Rural
Infrastructure.” Fluence Corporation, 21 May 2018, www.fluencecorp.com/china-five-
year-plan-focuses-on-green-growth-and-rural-development/.
Bell, Daniel. China's New Confucianism: Politics and Everyday Life in a Changing Society.
Princeton University Press, 2010.

U l c e n a P a g e 11 | 11