Happy Individuals, Weeping Land

 

Huaxi Village, from Wang Zhiming’s blog

In this village, people live in multi-storey villas with two-car garages and nicely trimmed gardens. The K-12 education is free to all residents. Men over 55 years old and women over 50 receive pensions every month from the local government. The healthcare system is so developed that residents’ medical costs are 100 percent covered.

 

Not in Norway or in Sweden, the village is in China. Take a two-hour drive from Shanghai into southeastern Jiangsu Province, and search for a small town called Huaxi Village, you will find it, whose well-known name is “the richest village in China”.

Surprise? Believe it or not, wealthy villagers in Huaxi Village are not alone in China. They are in Shaanxi Province, in Shanxi Province, in Sichuan Province, in Yunnan Province, you list.

That’s a pretty happy story, isn’t it? But the story hasn’t finished yet. If you look closely to these people, you will find out that no matter where they are, they often have a same characteristic: their wealth has nothing to do with agriculture. Some open clothing factories, others exploit coal mine. In Huaxi’s case, villagers operate 12 main factories covering textile, clothing, steel and non-ferrous metal industries, with a total turnover of 40 billion Yuan (6 billion USD) in 2006.

In other word, the only way for Chinese villagers to get rich is not to be peasants any more. The sooner they escape from agriculture, the richer they could possibly get. What an irony.

Pressured by the central government’s “GDP-lism”, those local governments are eager to maximize their economic income from the land to compete with their counterparts in the government performance measurement. Driven by the greediness for money, individual peasants, businessmen and official authorities have the same motive of turning the arable land into something else more profitable. As a result, the worst-case scenario for agriculture is happening in China: the expropriation of farmland has increased 15-fold over the past decade. Until the end of 2008, the total amount of arable land in China is 1.82574 billion acre, accounting for 12.68 percent of China’s total land area, a per-capita average of less than 1.4 acres.

It is so close to 1.8 billion acre, officially called the “bottom red line” for China’s agriculture, a goal set by Chinese central government in 2006 and highlighted in the Outline of China’s the Eleventh Five-year Plan, which is almost the most important and practical governing guideline of Beijing government.

Beijing government may not be the one to blame for the problem. Having been trying to solve the problem, the Central Committee repealed agriculture tax in 2006. The Ministry of Land and Resources also supervised the local governments not to seize the cultivable land in many ways. But after years’ endeavor, the Ministry of Land and Resources still discovered 8514 cases of illegally using land in 2009, 33. 7 percent of which was happened in cultivable land.

The problem is not coming from the policy. The problem is coming from the pocket of every individual: the peasant who is desperate to get out of the poverty, the businessman who greedily stares at the underground coal mine, and the official authority who want to build more factories, develop more industries, and in turn, have a great governing reputation of high economic growth, of course, and get more tax.

Can you change any of these people’s minds? Do you dare to draw any money out of their pocket?

I am afraid no one can.

That comes to the end of the story: a bunch of happy individuals, and a weeping land.

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Call for Economy Transformation

Now that China has been buffeted by global financial crisis for more than a year, it is time for China to start economy transformation, urged the Editorial Board of the People’s Daily, the official newspaper of the Communist Party of China in an editorial.

The article argued that China is depended too much on international trade, which leads to economy prosperous, but also makes the whole system fragile. China should improve the production capabilities and technical skills of its own industries, rather than taking advantage of the cheap labor market.

I like this article because it gets the point of China’s weakness. China has been focusing too much on the GDP growing, and it really does a good job on it. But if China still relies on the cheap labor to produce the raw materials, without developing its own high-technology and high-end manufacturing industries, its economy cannot be considered as healthy.

The raw products like billet, rolled steel, refined oil and plastic are closely depended on the global climate. If the global market is manipulated by the industry giants or international speculators, China could do nothing but bear it.

An article called “Problems of China’s steel industry” tells what happened to China’s steel industry last year:

In 2009, industrial capacity exceeded 700 million tons while the domestic market could only consume about 560 million. The excess capacity is estimated at over 100 million tons. The situation may worsen this year as analysts predict demand will continue to lag behind supply.

China’s steel overcapacity is also a bad news for the environment. An article published on Chinastakes described its environmental problem:

China has overtaken the US as the largest emitter of greenhouse gases (GHG), to which steel industry contributes no small part.

Just before the Copenhagen climate conference, China promised to lower emissions per unit of GDP by 40 to 45 percent by 2020. As many countries, developed and developing, pointed out, this is the promise of merely a slowdown and not a cut of emissions, and pressure on China to get serious is increasing. The US Congress is even now considering levying penalties against imported products from high emission processes, and also including in climate change legislation additional tariffs on imported steel and other energy-intensive products to offset alleged competitive harm to domestic industries, should other countries not commit to equivalent GHG reductions. China is the key target, and he steel issue threatens to pass currency valuation as the most contentious trade issue between it and the United States.

It is an urgent need for China to transform from low-technology and polluting manufacturing to high-technology and eco-friendly industries. Being the fastest economy growing country is good, but China should also realize that GDP is not everything.

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