Depending on how you count the numbers, there are some 200-250 million farm households in China representing a population of some 700-800 million persons. When you think about the vastness of this human resource the reality is that nearly 1 in 10 persons on this planet is a Chinese farmer, and from within China’s burgeoning economy these are amongst the poorest of the poor.
From our own surveys in Shaanxi and Gansu and Shandong the amount of land tilled by a household of between 4 and 5 people usually including at least one mother in law, and because of a quirk in the one-child policy for farm households sometimes 2 or 3 children if the first born are female, is somewhere between 3.18 and 7.2 mu or somewhere between one half of and a little more than one acre. From this toil, wage employment and remittances the household will receive about 12,500 RMB in Gansu and about twice as much in Shaanxi or Shandong, or about U.S. $1,975 to $4,000 per household per year. In rural Shaanxi and Gansu, it has only been within the past decade that the government has stepped in to provide sufficient housing to remove farm households from caves carved into the sides of hills.
Even the luxuries of a modern industrial state escape the vast number of farm households. Car ownership in Gansu is only 3%, in Shaanxi 6% and in Shandong 15%. In Gansu only 1 in 5 farmers have any kind of mechanized machinery while in Shaanxi and Shandong only 1 in 3 farmers have any kind of mechanization. Perhaps 16% of farm households own a computer.
To get an idea of what this means in terms of inequality we can use the Starbucks test. This is a simple test which requires dividing the last price of coffee purchased at say a Starbucks in Beijing by the daily per capita income of a farm household. Depending on tastes and preferences a coffee in Beijing will run somewhere between 18 and 30 RMB so let’s split the difference at 24 RMB or U.S. $3.76. A household in Gansu has about 4.9 members on average so the per capita household income is 2,551 RMB per year or 6.98 RMB/day.
The Starbucks test is simply this; for a family of 4.9 from Gansu to go and enjoy a cup of coffee at Starbuck’s in Beijing it will cost each member of the household 3.43 days of labor. Farmers in Shaanxi or Shandong are more fortunate, for the typical Shaanxi household would only have to work 1.38 days for a round of Starbucks coffee, while those in Shandong 1.42 days. Compare again to the good fortune of a minimum wage worker in New York State who would be able to purchase not one, but two cups of Starbuck’s coffee for every hour worked!
The reality is that despite the rise of the middle classes in cosmopolitan Shanghai or Beijing or Nanjing or Xi’an the typical Chinese farmer is isolated and knows little about westerners except perhaps the distorted stereotypes played out in American dramas or comedy shows and whatever news might be available to them. In most villages we visit on our field research I am the first westerner ever seen by these people. The sight of me has driven young girls to tears from fright. I have been encircled by curious onlookers in a public square as they try to make sense of the conversations between me and my translators.
In northern Gansu where we travelled into the mountains located two hours from the middle of nowhere my research team was quickly removed to the home of the village leader, whereupon after four hours of Moutai shots they were satisfied that I was not sent as a spy to check up on violations of the one-child policy (for why else would an American be interested in them.). Suspicion again in a northern Shaanxi village whose members refused en masse to be surveyed by our students until the children reported that an American had visited them in school, and whence those same children returning to school were in giggly glee at seeing their digital image on my camera, created such a spectacle in full view of parents and grandparents that the villagers opened up. I have had local governors sheepishly ask, against local custom, if they might see and then perhaps keep a U.S. dollar, for they have never seen one for real. In a village in Shaanxi a bewildered woman in her 70’s, having never before heard spoken English, finally exclaimed after half an hour of translated conversation that she could not understand my dialect.
Nor for that matter does the west know rural China. Yet to understand rural China is to understand China herself. Should a tourist or business person see farmers toiling in the field, the scene may appear quaint and timeless; but beneath the surface the pains of inequality simmers. From the allocation of land use rights to restrictions on services faced by the millions of migrant workers that flood the industrial regions, benefits from China’s growth trickle down at a glacial pace.
To be fair the Chinese governments are not ignoring the problem. Special programs to enhance rural credit, infrastructure to open rural areas to transportation and industrialization, incentives for locating small and medium sized enterprises in rural areas, coordination of farm household into food and manufacturing value chains are bringing about change. But western investors can also do their bit. Direct foreign investment can help by looking beyond the rural workforce as a source of cheap labor by understanding rural life in all its forms. In a society that is bound by tight networks of friends and relatives based on history, custom, and trust, simple gestures of community and respect can go a long way in cementing east-west relationships.
Calum Turvey is the W.I. Myers Professor of Agricultural Finance at the Charles H. Dyson School of Applied Economics and Management of Cornell University. He also serves as the Editor of Agricultural Finance Review.