Over the past month and a half, China has been in the news for all the wrong reasons. Engaging their Indian Army counterparts in a bloody border skirmish at the Sino-Indian border in Ladakh that resulted in casualties on both sides, intruding into Taiwanese air space before being ‘driven out’, and increasing their aggressive posturing in the South China Sea, the second biggest economy of the world has been indulging in a set of tactics that seems inexplicable in addition to being downright indiscreet. In his recent book, journalist Howard French brought out an inextricable link between two planks on which the Chinese Communist Party (“CCP”) relies, for a stable functioning of China. While the first plank is the economic philosophy of fast growth, the second constitutes the purely ideological pillar of nationalism. The political ramifications of either of these pillars failing to be in lockstep with the other could be enormous. For example, in the event, China’s pace of economic growth was to slow down or even stagnate, the CCP might have no alternative but to whip up the nationalism rhetoric to a frenzied level. Such boosterism might even include overt military moves to seize the Diaoyu/Senkaku Islands thereby lighting the fuse that is the South China Sea. Howard French seems to be a man endowed with a fair degree of prescience. But is China really stagnating from within? Is there something that is ailing the dragon from within triggering an extraordinary burst of irksomeness, from which it wants the world’s attention to be deflected?
In an eminently readable book, “Invisible China”, Scott Rozelle and Natalie Hell illustrate from a development perspective, an insidious divide that is threatening to cleave the hegemon, resulting in the creation of a vertical divide. This divide is the massive Urban-Rural gap that has set off one of the biggest (if not the biggest) in-country income-inequality scenarios in the world at the time of this writing. Mr. Rozelle, a Senior Fellow at the Freeman Spogli Institute for International Studies and a Co-director at the Rural Education Action Program (REAP) in addition to being a Faculty affiliate at the Center on Democracy, Development, and the Rule of Law at Stanford University, brings to bear his extensive “China experience and exposure” in educating his readers about the potential perils that China is facing domestically. This is the problem of “Invisible China”, a China that is oblivious to the world and is hidden from every scrutinizing gaze.
Due to a rapidly risking wage rate for unskilled jobs, China’s hitherto unchallenged title as the Factory Of The World might be at great risk of being dismantled. As Mr. Rozelle illustrates, in the long run these rising wages would distort China’s competitive advantage in low-skilled, labour intensive production. “In a globalized world where wages rise, companies simply find cheaper labour elsewhere or (increasingly) find a way to automate.” This unfortunate situation leads to what Mr. Rozelle terms, “The Middle-Income Trap.” Quoting the economist Paul Collier, Mr. Rozelle explains the fact that development is a game of Chutes and Ladders. “if a country is lucky enough to land on a “Ladder”, it gets whisked to a higher level on the Board. Landing on a “Chute” on the other hand, means moving, just as quickly to a lower point in the game and having to retrace one’s steps.” This Chute is known as the Middle-Income Trap. This is where Mr. Rozelle’s book gets really interesting. In order to avoid this perilous Middle-Income Trap, Mr. Rozelle argues that there is an inherent need to invest in and enhance human capital. On this critical parameter, China is rendered susceptible in more ways than one. An “inconvenient truth” as Mr. Rozelle puts it, is the fact that a teeming majority of China’s population just does not possess the requisite skillsets to move up the supply chain or to trade a blue-collar job for a white collared one. This woeful dearth of human capital is starkly borne out by the fact that currently about 70 percent of the Chinese labour force is unskilled with no more than a junior high school education. A yawning gap in education and skill levels means a fertile ground for dangerous polarization. The urban-rural ‘gap’ is more of an abyss than a chasm as Mr. Rozelle illustrates in the book. “The average citizen in urban Shanghai makes twelve times the income of someone living in rural Gansu. In the United States by contrast, the average income differential between Manhattan and West Virginia is less than a factor of four.”
Exacerbating this problem is the singularly unique dichotomy, courtesy the One Child norm. This myopic policy coupled with a preference for the male child has meant that around forty million men in China will neither have a wife nor a family. As Mr. Rozelle highlights, a well-established fact in criminology is one that links celibacy to crime and gangs. Young unmarried men are more likely than their married counterparts to engage in crime and join gangs regardless of the circumstances. True to logic, crime rates in China are already rising. “From 1998 to 2004, criminal offense increased by 14 percent every year. Over the same period, the number of arrests for both property crimes and violent crimes nearly doubled.”
However, the primary reason for the plummeting human capital and the consequent urban-rural divide is a draconian and antediluvian Government policy that ensures that inequality in the form of an urban-rural divide is deeply entrenched within the populace. Under a household registration system termed, “hukou”, “at birth all citizens are assigned either a rural or an urban identity. This status fundamentally affects every moment of life in China and is very difficult to change….all public services depend upon one’s hukou status. For example, rural and urban children move through almost entirely separate educational systems. Rural students, with few exceptions, are allowed to attend only rural schools, and urban students go to urban schools. Even if rural families migrate to the cities to find work – as hundreds of millions have done – in most places they are not allowed to put their children into urban public schools. Instead, most migrant parents must choose between leaving their children behind to live with relatives in the countryside so that can go to public school (the genesis of the infamous “left behind child”), or keeping their children with them in the cities but sending them to low-quality and legally provisional private schools for migrant children.”
Just take a couple of minutes and read the aforementioned paragraph aloud to grasp the unfortunate ramifications of a crazily denuded system.
The Hukou has spawned a gap in human capital that is hard to fathom in the ordinary course of economic and social perception. According to the 2015 micro census, while 97% of urban students attend high school and graduate, only 43 percent of the rural youth go to high school. However, of late, extensive efforts by Government to rapidly expand access to education has ensured in pushing nearly 80% of rural kids to attend school.
The quality of schooling is also an area of concern in the overall Chinese landscape. While the elite Chinese students attend privileged high-quality schools, for the unluckier ones unable to ace their tests, there are vocational institutions as alternative learning streams. The vocational high schools are three-year programmes, where students divide their time between in-class instructions and professional internships. While there are some excellent institutions providing quality education to the enrolled students, on the whole the Vocational high schools are in an appalling state of functioning. Here is a nightmarish experience as recounted by one of the students. “As he walked to class on his first day, there were no adults in sight. He passed groups of kids hanging out in the courtyard, smoking cigarettes and laughing…The teacher were cold and unfriendly. Some would lecture woodenly from the front of the room, writing on the chalkboard with their backs to the students, never turning around to see if anyone was paying attention. Other teachers would come into the classroom, mumble a sentence or two about the new assignment, and walk right out again. The few students who came to class spent most of the time sleeping on their desks, playing games on their phones, or listening to music through headphones….Outside class, students spent their time in the dorms drinking beer or in the computer lab playing League of Legends, chatting online, or watching porn. Sometimes Tao’s (the student) math teacher would stop by a group of students to sell them cigarettes.”
It came as no surprise when Mr. Rozelle’s team found that 91% of the students scored the same or worse after an additional year of schooling. Students majoring in “natural gas pipeline design” were delivering gas canisters house-to-house or working as cashiers in roadside gas stations.
When it comes to infant and child health parameters, “Invisible China” does not score good either. Millions of children inhabiting Invisible China, suffer from iron-deficiency anemia. This disease has significant physical and cognitive effects, interfering with the body’s ability to ferry Oxygen to the various organs, including the brain. As a result, this causes fatigue, poor attention and long-term cognitive impairment. A research conducted by Mr. Rozelle’s team between 2009 and 2012 revealed that greater than 30% of elementary school students in rural China suffered from iron-deficiency anemia. Poor vision is yet another menace that is plaguing the children of Invisible China. “In rural China, the rate of nearsightedness (myopia) ranges from about 10% among third graders to 30% among sixth graders. In other words, the rate of poor vision in rural China’s schools is two to three times in other countries.”
Many of the children, even while infants in rural China, fail the classic Bayley Scales of Infant and Toddler Development (Bayley test), a test employed to measure babies’ and toddlers’ cognitive and motor development. This is basically due to a lack of engagement between the parents and the children. As Mr. Rozelle evidences, inexpensive and perfectly implementable interventions such as provision of multivitamins and de worming tablets, issuing corrective glasses to children, and enhancing the interaction between children and their parents may go a long way in mitigating these adverse outcomes.
China finds itself at a crossroad today. Jobs are being ferreted out of the country at an alarming rate and tens and thousands of people are being laid off. The putative destination of choice is now a mere alternative. In the year 2015, the Korean Chaebol, Samsung declared its intention to move its production base from China to Vietnam. Meanwhile the footwear industry, has commenced relocating its factories to countries such as Ethiopia, where the shoe export segment has increased fivefold over the past five years. Close to forty thousand factories are shutting shop every single year. In spite of the Government instituting a slew of reforms, the country is nowhere close to achieving an acceptable traction in so far as human capital is concerned. And unlike what Mr. Rozelle alludes to as the “Graduate” countries – countries that managed to avoid the Middle-Income Trap – such as Portugal, Spain and Ireland, there is no European Union to bolster China in this endeavour. This lesson of China is a clarion call for other countries such as India etc. to act before the situation moves beyond redemption.
Meanwhile, the hegemon embarks on its ill-advised strategy of ticking off a multitude of neighbours and threatening to envelope the whole world into a perfectly avoidable geopolitical stalemate.
(Invisible China How the Urban-Rural Divide threaten’ s China’s Rise – Scott Rozelle and Natalie Hell is published by University of Chicago Press and will be released on the 6th of October 2020.)