Despite witnessing an impressive macroeconomic performance of their country, many Chinese have not benefited from this growth and investment boom. The conditions remain especially dire in rural China, still by and large mired in grinding poverty. A recent NYT article talks about this situation using the example of southern Henan Province. Located just West of the booming coastal cities, this area finds itself cut off from the economic opportunities created by China’s new economic openness.
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Here in Henan’s rural Gushi County, only 73,000 of 1.4 million farmers fall below the official poverty level of $94 a year [but many more] subsist between the official poverty line and the $1 a day standard long used by the World Bank. The World Bank’s estimate of the number of poor people in China was tripled to 300 million from 100 million last month, after a new survey of prices altered the picture of what a dollar can buy. (…) By the new calculations, estimates of the overall size of the Chinese economy also shrank by 40 percent.
This situation illustrates the common problems of weak institutions and weak governance. China still has two very distinct economic systems that divide the nation between those who have access to the emerging institutions of a modern market economy and those – such as most peasants – who hardly operate within the cash economy. As far as governance, pervasive corruption hinders the development of broad-based markets. The current system picks winners and losers, limits the flow of information as well as participation in the economy of those living on the country’s geographic and social margins, and does not provide an adequate oversight of those in power.
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For many villagers, the central government is out of touch with rural realities in places like this, and the local government is filled with venal officials who shower spending intended for the rural poor on provincial towns and cities or simply take the money for themselves.
The only way this can be changed is through building more inclusive, more participatory institutions and better governance that would bring about greater transparency and accountability, and give broader segments of the Chinese society a voice in the policies that affect them.
Published Date: January 14, 2008