Since the beginning of the reform period, rural out-migration has had a significant impact on economic development in China. Rural surplus labor, hidden in the collectives of the Mao era, has, with reform of the Hukou Household Registration System, burst through such institutional levies, inundating cities such as Shanghai, Beijing, and Guangdong with a transient and low cost labor force.

     

Export led growth in China has been so successful in  large part because it made use of cheap migrant labor. It has been able to do this because the nature of the modern Hukou system insures that the majority of migrants are inseparably tied to their rural origins. As a result of Hukou policy many migrants are illegally resident in urban areas and as such are denied access to urban social security, relegated to jobs that urban residence wont take, and susceptible to the abuse of power by people in enterprises and local government. These migrants are permanently tied to their rural origins as support from home-town networks and  rural land holdings provide the only "social security" available to them. Ultimately this has created a vast migrant labor regime subsidized by rural origin areas. (See Murphy)

     

This dynamic is part of a larger development path which has since the early 90s focused on urban development at the expense of rural areas (See Huang). While migration has served as a means of reducing social and political conflict in rural areas, it has failed to lead to substantial economic growth in rural areas. Now that exports have failed and migrants are out of work, rural areas are too impoverished to act as a substantial consumer market. With a limited social safety net and low annual incomes rural families are forced to save what money they do have in case of illness. The "let some people get rich first" ideology of the Deng era needs to change if China is to wean itself off of export-dependence.

     

Of immediate concern to the Chinese government is the threat to stability that un-employed migrant workers pose in the current downturn. According to conservative estimates, 20 million of 130 million migrant workers will lose their jobs in urban areas in 2009. Many of these rural residents have not lived in the countryside for years, have no work prospects there, and have no land to return to. The 'repatriation' of this potentially alienated group will put severe strain on social and political harmony in rural areas.

     

Does economic stagnation really pose a threat to the ruling party?

     

This leads to an important question that is at the root of much speculation concerning the current downturn. Does economic stagnation really pose a threat to the ruling party? By all accounts, 2009 is a potentially volatile year. Not only is this year the 60^th anniversary of the Tibetan uprising, and the 20^th anniversary of Tiananmen, but predictions based on previous years expect the continued increase in rural unrest, such as riots, demonstrations, labor disputes, etc. (See Joseph Fewsmith). On top of this, the Party must deal with the fact that 25% of China's 6.1 million college graduates will be unable to find work in 2009.  In total, scholars estimate 48 million Chinese will be jobless in 2009.

     

Many maintain that with the abandonment of any state centered socialist ideology in the reforms of the1970s, the legitimacy of the ruling party has rested on economic development. The Chinese population has accepted CCP rule in exchange for economic development. The party itself has acknowledged that it must maintain GDP growth at 8 percent in order to avoid major social unrest. This analysis has become particularly well known during the 20th anniversary of Tian An Men as reports in western media try to explain the perceived apathy towards the protests by Chinese citizens.

     

This change in popular attitude towards the central government has been detailed extensively by Kevin O'Brien in his discussion of contemporary popular protests. Using the term "rightful resistance" O'Brien maintains that contemporary protests in rural China are often not anti establishment or anti CCP, but are usually concerned with specific cases of grievances. These modern protests are often against corrupt local official or local governments' disregard for Central government policies, and are thus in line with the CCP interests.

     

A similar conclusion is reached by Minxin Pei. Pei sees fears of social unrest in the wake of the downturn as overblown. The repressive capacity of the Chinese state has proven to be quite capable of isolating and diffusing unrest. Though there are "90,000 riots, strikes, demonstrations, and collective protests reported annually" (See Pei), disturbances such as these are usually sparked by specific economic concerns, are not organized, do not spread, and pose little threat to government rule. 

     

Pei also points to the successful use of repressive power to maintain control in the face of economic stagnation by regimes in Burma, North Korea, and Zimbabwe.

     

While current levels of unrest present little revolutionary potential, the economic down turn does pose a serious concern for the Chinese government. If foreign consumption does not pick up in the near future and the economic crisis persists, even divided protests will pay a heavy toll on the state's governing capacity and facade of a "harmonious society". How the Chinese government deals with the issue of migrant labor and rural-urban inequality will be a pressing concern in the immediate future. The current crisis has highlighted the importance of reducing inequality in Chinese development. To enhance the sustainability of economic development and reduce China's susceptibility to external shocks, concrete action must be taken to reduce the inequalities that have developed over the past few decades.

     

Sources:

     

Murphy, Rachel. How Migrant Labor Is Changing Rural China. New York: Cambridge UP, 2002.

     

Huang, Yasheng. Capitalism with Chinese characteristics entrepreneurship and the state. Cambridge: Cambridge UP, 2008.