China's congress targets rural quality-of-life issues
CHINA'S 17.8 percent hike in military spending grabbed the most attention during the 12-day National People's Congress last month. But as important as the increase was to foreign observers, the real focus of the NPC was on righting domestic social inequities and injustice. The speeches of both Chinese President Hu Jintao and Premier Wen Jiabao are laden with concern for creating a "harmonious society" (hexieshehui) or having all sectors of society smoothly functioning together, effecting a "reasonably comfortable society" (xiaokangshehui) that is predominately middle class. Unattended quality of life issues threaten China's political stability. Understanding such domestic issues might well be a better gauge of China's power equation than simple fixation on military power, as important as it is.
Property disputes and land grabs have accelerated in recent years as China's farmland is gobbled up for industrial parks and skyscrapers. Security officers carry away a woman protesting a land grab in Huanggangsi village in Zhengzhou.
The NPC, China's parliament, meets annually in Beijing's Great Hall of the People where 3,000 delegates gather to pass legislation. Normally considered a docile instrument -- largely absent of the spirited debate for which other parliaments are known -- the NPC is a rubber stamp, rendering the proceedings a big yawn. However, recent sessions suggest the beginning of a break with the past as more delegates begin to represent their constituency's interest.
Since China introduced its economic reforms in 1978, the economy has grown at an annual average breakneck speed in excess of 9.5 percent. All of which sounds good, but which also has fueled inflation and opportunities for corruption. To address both problems, Wen announced that China would hold economic growth this year to 8 percent. However, he set the same goal last year only to see the economy grow at 10.7 percent.
HUGE INCOME GAP
China's income gap is crucially important to the leadership. According to Chinese government statistics reported in the Xinhuanet, the Gini coefficient for China is quickly approaching 0.5; the danger point is 0.4. The wealthiest 10 percent of the population control more than 40 percent of assets; the poorest 10 percent control only 2 percent of assets.
The income gap also can be seen in the income disparity between urban and rural residents and between regions. According to the Economist Intelligence Unit, urban incomes were 3.2 times larger than rural incomes in 2005. Regionally, coastal China is generally considered well off while Qinghai and Gansu Provinces in the west are considered poor and underdeveloped.
Not only are there gaps in income and wealth, there are additional gaps in educational opportunities offered in more developed, urban areas and less fortunate locales. In 2007, Wen promised to increase investment in education by 42 percent and to abolish tuition in the countryside, guaranteeing nine years of free education. In addition, the 2007 budget increases expenditures for medical care by 87 percent.
Extortionate rural taxation and unprincipled termination of rural land leases have greatly contributed to violent countryside demonstrations, some requiring lethal force to quell, that have grown from 58,000 in 2003 to 87,000 in 2005, according to Ministry of Public Safety statistics.
Tax exploitation is endemic in the Chinese countryside. Local officials receive a mandate from higher-level officials to generate a certain amount of tax revenue and pass it upwards. They then bloat the figure, causing many economically marginal families to pay more than they can manage, and then skim the inflated part off for their own benefit.
As Hu and Wen well know, the fall of dynasties throughout Chinese history has largely been caused by excessive taxation of agricultural peasants. Addressing the NPC, Wen reminded delegates that, in 2006, Hu and Wen had ended the 2,600-year tradition of agricultural peasants paying taxes.
All rural land in China is owned by the state and leased to farmers. As has happened so often in recent years, a developer appears who wants to build a shopping mall or factory. They cultivate the local party secretary and persuade him to break the lease on the land of interest. Of course, they reward the secretary, who also benefits by skimming off a certain percentage of government supplied compensation for the displaced land tenants. Being abruptly yanked off of the land and not receiving fair compensation also has fueled protest. The practice has grown like a raging forest fire driven by a wild wind. To prevent further exploitation and preserve stability, the NPC agreed to eliminate the regulation allowing the state to requisition land for development, once leased.
Urban land also is owned by the state. In China's ongoing real estate boom, many middle-class families have bought houses, condominiums and other forms of housing and wanted to be assured that the land would not be pulled out from underneath them. Realizing the importance of the middle class to China's continued economic growth, it was expected that urban leases would be automatically lengthened.
The most contentious bill before the NPC was the Property Law of the People's Republic of China (wuquanfa). First discussed 14 years ago and tabled without a vote at last year's NPC, the property law could be passed this year only after vigorous lobbying before the NPC convened. Private businesses contribute 65 percent of China's GDP and pay 70 percent of the taxes. Thus the government has felt an increasing need to assure private business owners, the middle class and other pillars of the burgeoning economy that their private property is protected.
Contrarily, remnant Marxists hold another view. Han Deqiang, Beijing University of Aeronautics and Astronautics economist, said, "The property law basically takes all the illegally gotten income and legalizes it. It's too liberal. It is too right wing. This is a step back to the laissez faire ideas of the 18th century." Others opined the socialist fundamentals upon which the New China was founded would be violated.
LAW VERSUS REALITY
It is questionable how well enforced and administered these new laws and reforms will be.
"There is a distinction between law and actual reality, said Han Xu, a Chinese Academy of Social Sciences political scientist. Moreover, they put more power in the hands of the central government at the loss of provincial and local government cadres' power and opportunity for corruption, according to Bill O'Grady, chief global strategist for A.G. Edwards. Provincial and local officials throughout Chinese history have scuttled central government initiatives.
Hu definitely needs to show progress by Sept. 23 when the 17th National Party Congress convenes in order to consolidate his leadership, enabling him to place more of those directly allied to him in key positions and to influence the make-up of China's next generation of leadership.
Bill Sharp is adjunct professor of East Asian International Relations at Hawaii Pacific University. He writes a monthly commentary about events in Asia for the Star-Bulletin. email@example.com