NOTHING PERHAPS better illustrates the transformation of China than the extraordinary migration which began in the last few days and will see over a month some 2.5 billion journeys to and from the country’s rural vastnesses. Millions are returning home to celebrate the start of the year of the tiger on February 14th, many of them the unofficial migrants who now make up 40 per cent of the workforces of the country’s cities and a large part of their poorest and most exploited.
The migration is a parable for the urban-rural and east-west divides which characterise China today and which have seen in recent years, along with its spectacular growth, a steady widening of inequality in this ostensibly communist state. While booming China will this year overtake Japan as the world’s second economy, its ranking in the OECD inequality league has put it among the most unequal societies in the world, three places worse than the US and substantially behind Ireland.
But there is now evidence that the trend may have been halted, and even begun to reverse. The OECD's Economic Survey of China, published on Tuesday, says that more welfare spending in rural areas and increased migration to cities has begun to reduce the three to one income disparity between urban and rural workers. Allowing for substantial remittance payments from migrants and the lower cost of living in rural areas, the gap may in reality now be two to one.
As a measure of the wealth of China’s new rich – the top 10 per cent, some 50 million, earn on average $30,000 a year – the report records that demand for flat screen TVs is up 90 per cent in 2009, some 19 per cent of world demand. But growing disparities with the rural poor have triggered unrest and riots in the countryside leading to major reappraisals of policy. Patchy welfare provision in the form of income top-ups for the poorest, though quite different in rural and urban areas, new provisions for pensions, and the beginnings of provision for universal healthcare, have begun to make a difference. However, the report warns that such efforts must be harmonised and unified at national level unless the burden on poor areas is to become unmanageable.
But Beijing's effort to close the gap has been hindered by a reluctance to tackle the most critical of all rural problems – land ownership and the hukou, the household registration system, that stops farmers migrating legally to cities. Yet the pull continues, with now one in two living in a city, younger, more educated than ever. Reform will follow.