Prosper or Perish: Credit and Fiscal Systems in Rural China

6. The Local Government–Led Path to Rural Decay

126 6 THE LOCAL GOVERNMENT–LED PATH TO RURAL DECAY I had been in this village in Sichuan province for a week now, but there was still no sign of any working-age adults. There were plenty of children and old folks, but no healthy young men or women. It was an “hourglass population pyramid” village, in which the population pyramid is hollowed out at the center. Nearly all working-aged adults—men and women alike—had left to become migrant workers in Guangdong, Beijing, and other coastal provinces and cities, in order to support their families back in the village. Men were typically construction workers. Women usually worked in the factories. Children were left behind to be taken care of by their grandparents. I wondered how these children would grow into emotionally healthy adulthood without the company of their parents. Unfortunately, this situation was common in China’s hinterlands. The prospering townships of the previous chapter do not represent the majority of rural China. This chapter tells a more sobering tale of rural townships, one that applies to vast swaths of the countryside. I vividly illustrate how failed attempts at industrialization by local governments drained their financial resources , leaving them paralyzed and unable to provide basic public services. In such “perished” locales, basic education and health care have become out-ofpocket expenses for the already destitute citizenry. Moreover, the loans that financed the local governments’ failed ventures came predominantly from local residents’ savings. The high rates of default suggest that a substantial portion of hard-earned rural household savings have been drained away. In addition, grassroots authorities scrambling for revenue have tried all means available to them to augment their income. Such measures, ranging from imposing arbitrary taxes THE LOCAL GOVERNMENT–LED PATH TO RURAL DECAY 127 and fees on farmers to illegally confiscating and trading farmland, have been immediate causes of popular discontent and unrest in rural China. Perished Cases This chapter draws on case studies of six townships located across three provinces—Sichuan, Hebei, and Shandong. These townships—Xiao, Cheng, Zhou, Zhang, Sun, and Fan—have perished as a consequence of failed local government–led industrialization.1 Socioeconomic Characteristics of the Cases These perished townships do not share a common socioeconomic profile. They differ in geographical position,in population size and density,and in the characteristics and size of their economy. Situated in Sichuan province, Xiao, Cheng, Zhou, and Zhang are more densely populated than Fan in Hebei and Sun in Shandong. Except for Sun,which had an income per capita of 3,900 yuan in 2003,all the other townships had income levels below the national average of 3,255 yuan. That said, Sun is still poorer than the average township in Shandong province (table 6.1). TABLE 6.1 Basic socioeconomic indicators of the perished townships TOWNSHIP XIAO CHENG ZHOU ZHANG SUN FAN Province Sichuan Sichuan Sichuan Sichuan Shandong Hebei Average income of rural households by province (million yuan) 3002 3002 3002 3002 4368 3802 Income per capita (million yuan) 2,823 2,211 1,820 1,886 3,900 2,800 GDP (million yuan) 279.4 296.3 21.8 28.9 152.9* 19.6* Population 5,173 9,000 12,027 18,000 39,200 7,000 Land area (sq. km) 51.7 17.2 20.7 31.0 98.5 57 Pop. density (per sq. km) 100 523 581 581 398 122 No. of migrant workers (“+/–” denotes net inward/outward) −200 — −3500 (80% of working pop) −4500 (56% of working pop) — — Distance to closest urban center (km) 170 140 300 300 70 108 *Estimated by author. Income per capita multiplied by population size. 128 PROSPER OR PERISH The perished cases also differ in terms of population density, a characteristic unrelated to the provinces to which they belong. Zhou, Zhang, and Cheng in Sichuan are the most densely populated (523–81 people per sq. km), followed by Sun in Shandong (398 people per sq. km), Fan in Hebei, and Xiao in Sichuan (122 and 100 people per sq. km, respectively). Emigration is a distinguishing feature of the labor markets in Zhou and Zhang, where more than 60 percent of the working population makes a living outside the province. This is in stark contrast to the migrant-filled Zen and the emigration-low Han described in chapter 5. Control Variables All six townships similarly pursued local government–led industrialization and attained...