China's leadership challenge in new era: douse "inequality volcano"

YANGCHANG, China Wed Nov 7, 2012 1:07pm EST

People walk in front of a screen showing propaganda displays near the Great Hall of the People at Beijing's Tiananmen Square, November 7, 2012. REUTERS/Carlos Barria

People walk in front of a screen showing propaganda displays near the Great Hall of the People at Beijing's Tiananmen Square, November 7, 2012.

Credit: Reuters/Carlos Barria

YANGCHANG, China (Reuters) - In the mountain village of Yangchang in the backwater province of Guizhou in southwestern China, the roof of the Yang family home is cracked and about to cave in, held upright only by a few rickety tree trunks.

Nearly penniless after quitting their jobs in a coastal city, Yang Hechun and her husband recently returned to the village to care for a sickly 71-year-old grandmother and two young children.

"We can hardly afford to eat, never mind mend our house," said Yang, over a meal of rice, chilli bean sprouts, peanuts and tofu. "We earn one yuan, then we spend one yuan."

As China prepares for its once in a decade leadership transition at the 18th Communist Party Congress, which begins on Thursday in Beijing, the outside world sees an inexorably rising economic power: Beijing is now the world's largest exporter, the second-biggest economy overall, and it controls over $3.2 trillion in foreign exchange reserves.

Yet the disconnect between those numbers and the lives of families like the Yangs lies at the core of the most vexing issues the country's incoming leadership will confront: sustaining economic growth, rooting out corruption, narrowing the wealth gap, and preserving the party's legitimacy in the face of mounting public grievances over decades of iron-fisted rule.

President Hu Jintao, in a speech at the opening of the party congress on Thursday, is expected to tout the country's economic advances over the past decade, while acknowledging that China still faces many difficulties.

Reforms, most economists agree, will be vital to avoid stagnation and bigger socio-economic disruptions. What's unclear is just how aggressively the incoming leadership will push new policies.

Though Yang Hechun acknowledges her family's life has improved over the past decade, their continuing daily struggles resonate in villages, cities, campuses and factory floors throughout China.

$1.25 A DAY

At a roundabout in Bijie, the region of Guizhou where the Yangs live, a towering billboard bedecked with flowers and adorned with an image of Hu Jintao proclaims: "Explore, develop and pioneer ... work hard to lift, reform and construct Bijie to a higher level."

The Yangs' village was designated an experimental zone for poverty alleviation policies and economic development in 1988, during president Hu Jintao's stint as party chief of Guizhou.

Development over the past few years has brought a two-lane highway and bridges to the once remote region, along with electricity.

But the Yangs still have no running water, and food, education and medical expenses swiftly erode their meager earnings from harvesting chilli peppers and corn on a tiny farm.

Thirteen percent of China's 1.3 billion people still live on less than $1.25 per day according to the United Nations Development Program and Guizhou has the poorest per capita income of any of the country's provinces.

Beijing set aside 415 billion yuan ($66.5 billion) over the past five years to fund minimum livelihood allowances for China's most needy, while welfare coverage -- including basic health insurance -- has broadened to include almost 95 percent of households, as have primary school fee waivers in more areas.

Yet, goodwill earned from those measures has been corroded by deeply held suspicions of corruption. Nationwide, over half a million grassroots officials were punished for graft and other so called "discipline violations" over the last five years.

The Yangs believe the failure to pave broken roads and build water pipes in their village is because of local corruption. Public works projects have been talked about for years but never built, even with state funding and contributions from residents.


Across China, the perception of widespread corruption is intensifying grassroots demands for official accountability —demands that the party all too often ignores.

Shen Zhiyun is a crippled former farmer who lives in the nearby village of Guole. He and other villagers were told by village officials recently that hundreds of hectares of farmland would be flooded to form a reservoir serving a new industrial estate in a nearby town.

Despite the threat to local livelihoods, district cadres never consulted the villagers, and will soon build a dam.

"We oppose it, but we also can't oppose it. That's how things are in China," said Shen. "They eat the people and don't even spit out the bones ... those officials with wolf's fangs."

The sense of powerlessness Shen expresses is widespread, and poses, in the minds of some analysts, a broad threat to the party's cherished stability.

As vast as the income disparity is between the rich and poor -- Beijing hasn't published official inequality statistics for over a decade, but the United Nations estimates the gap has grown steadily wider over the last decade -- the maltreatment of ordinary Chinese citizens by officials may be the more dangerous flashpoint.

"The main challenge is not income inequality, it's power inequality, and it's much less easy to deal with," said Martin Whyte, a Harvard University sociologist and author of a book on China and its disparities.

"Keeping this power inequality volcano dormant may be much more difficult than keeping the income inequality volcano under control, since to do so would require not simply new programs and financial resources, but fundamental political reforms."


Even in the more prosperous parts of China, the pressures on the government from the bottom up are no less relentless. Two years ago, in the factory town of Xiaolan in the Pearl River Delta -- China's factory for the world -- workers at a Honda Lock auto parts manufacturer went on strike, weary of their low-paid, grinding work.

Word of their action -- a rare, early instance of a strike that crippled production at a multinational corporation in China -- spread rapidly on social media. It inspired other factory workers across the country and forced many firms and local authorities to respond by raising minimum wages and benefits.

At Honda Lock, pay has increased 30 per cent since 2010, including increases in housing and transport subsidies.

Lin Wenwu is one of the workers who benefited from the strike. He makes about $560 a month now. A new desktop computer sits in the small one-room flat he and his wife rent, and he zips around Xiaolan on a newly purchased black motorcycle.

Still, Lin's not satisfied. He is one of China's army of migrant workers -- 150 million strong -- who largely remain second class citizens, denied welfare benefits that accrue to local city dwellers through a household registration (or "hukou") system, an outdated policy from the Mao era originally intended to control rural-urban drift.

The system means Lin's two children can't get free schooling in Xiaolan, so he leaves them behind in his home province of Guangxi, where they're cared for by relatives. He sees them roughly three times a year for several weeks.

"I miss them," he said. "We hope that after the (party congress) the leaders will do more to improve the livelihoods of people like us."


Back in Guizhou, huddled around a stove, the Yangs have little faith in their political leaders. The family is wondering how to raise the 40,000 yuan needed to rebuild the roof, now propped up by bricks and sawed-off tree-trunks.

So far, local village officials have rebuffed requests for a construction subsidy of 5,000 yuan normally eligible to most villagers, unless the family first coughs up 1,000 yuan to facilitate the application.

"Several neighbors paid up last year, but they've haven't gotten any money back at all," said Yang.

"Sometimes I feel the poorest people get nothing, and the richest get everything. We can only rely on ourselves."

(Additional reporting by David Stanway in Beijing; Editing by Raju Gopalakrishnan)

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Comments (6)
jo5319 wrote:
This article failed to mention one other huge challenge.

When these poor folks in rural, who earn less than $2 a day, experience a natural disaster, the western media universally refuse to highlight in a way that would prompt any charity donations. This is true whether the natural disaster is an earthquake, unprecedented floods, or of any other category.

In contrast, when the traditionally most racist Asian country, and the richest by average GDP( ignoring Singapore, which is a city state, not a country geographically and by size), experience any natural disaster, the western media keep hyping up how sorrowful their plights are. Placido Domingo gives charity concerts when the richest of the rich and the most racist experience natural disaster because their corporate utility company, TEPCO and elected officials were corrupt and negligent. Yet, the media made it out as if the world should go and donate towards the compensation and rebuilding funds of these corrupt organizations.

The most egregious case was the ABC anchor, Charles Gibson, the consummate racist. The rural poor of Taiwan was extremely unprecedented rainfall, leading to horrible floods. People were stranded in the rural areas. The Taiwanese Government was seeking international help, particularly helicopters to help rescue stranded flood victims. What did Charles Gibson choose to do under that circumstance?

Didn’t report any of it? NO.
Report the floods and the victims? No. None of it.

Yet, Gibson reported on it, showing one hotel that collapsed, as if to day— westerners, don’t go to Taiwan as tourists, those buildings are dangerous and you could be in there. Not only was it racist, it was defamation. Why? Actually that building was known to be at risk structurally, and therefore was evacuated for a while. Officials predict that the floods will cause the empty hotel building to collapse; that’s why reporters were able to focus their lens on it for a long time, WAITING for it to collapse. Yet, Charles Gibson, the slandering racist, showed only the collapse of a building, stating that it was a hotel in a resort area in Taiwan( which was true) but failed to report the real circumstances.

When the report came out, and complaints came in, Gibson was unrepentant. He ran an ad, saying “I report only what you need to know”. In law, that’s a kind of defamatory, putting the victim under false light. Worse, in any reports about Taiwan, Gibson usually states briefly, “Taiwan is part of China”, clearly explaining that because of his racist views of China, and the Chinese people, even Taiwanese, who have been our American allies, would be viewed condescendingly, and their natural disasters distorted, and viewed as an opportunity to shame then and degrade them!!

Gibson was forced to go into early retirement. However, the head of ABC who forced him to retire, expressed regret that he found fault with Gibson. In his book, Exit Interview,David Westin failed to come clean with this shameful habit of western networks, and turned around to defend the blatant racist Gibson. On Charlie Rose, when Westin was promoting his book, he backtracked on his decision on forcing Gibson to retire, which is, another way of saying Westin supports racist and egregious treatment of the coverage of natural disaster. Utterly scandalous! History will show that Westin was likely a lawyer, who worried about experiencing a scandal from which ABC wouldn’t recover. However, when treated with grace, as Asians tend to be, about racist remarks, he reverted his stance to support egregiously racist and defamatory reports, and sets the tone for subtle Asian bashing for ABC. What utter hypocrisy Westin exhibited in the documentation of the events of the firing of the racist Gibson!

Because of the failure of Westin, the American news networks continued to show an egregiously racist and discriminatory approach towards natural disasters in most of Asia, but stepped up its discriminatory way of highlighting all Japanese natural disasters that are NOT SO NATURAL, to drum up donations.

In one sentence, American media was about bailing out the rich, not only for the 2008 crisis, but also for the honorary Caucasians, Japanese, selectively. Why do we Americans keep do it stubbornly, despite the popular opinion that all races should be treated equal?

Why do we act so opposite than our professed values, in our bailouts, in our media-mediated bailout for TEPCO, so that TEPCO won’t go bankrupt in taking responsibility to make full compensations for its unnatural role in causing the unnatural results of the Tsunamis?

WHY? Obama: it’s your job in the second term to fix this, if you really want all races to be portrayed fairly and without unfair discrimination in our media, particularly in partially Government funded PBS news, for example.

Nov 07, 2012 4:10pm EST  --  Report as abuse
So the country, with 3.2 trillion in reserves and a past record of abusing humanitarian donations should get bailed out by others? I say the hell with that. They can empty their foreign reserve accounts to take care of their own, but of course they won’t. You’re barking up the wrong tree.

Nov 07, 2012 6:14pm EST  --  Report as abuse
Free_Pacific wrote:

I recall a certain earthquake, in China that was highlighted by western media. The local Chinese celebs then staged a big fundraiser… none of that money ever reached the people who suffered from the earthquake, as it was just a big show for the international community. The earthquake victims were from a minority group and are subject to discrimination within the current Chinese system.

What people in China talk about around the dinner table at home, can be vastly different from what the media there tell you. When it comes to China, you dont have to go hunting in the west to highlight cynicism. Also, if you want prejudice, you dont have to look overseas either.

Nov 07, 2012 6:40pm EST  --  Report as abuse
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