Dispatches

Trickle-down Economics with Chinese Characteristics12 min read

For rural Chinese, economic reform is worth the 40-year wait – Matt Chitwood

President Xi Jinping’s New Era was ushered in by a new cast of characters: ballerinas in pink tutus, laborers in yellow hardhats, hip-hop dancers in silver foil Hammer pants and a girl in pigtails. The new proletariat took center stage in Beijing last December to ring in the 40th anniversary of China’s Reform and Opening. Their highly choreographed number, ‘Enter the New Era,’ was just one of dozens in a nationally televised epic production that paid tribute to the economic reforms championed by Deng Xiaoping in the 1980s, and now Xi, that have paved the way for China’s prosperity.

Kang Jiaxin sits transfixed by the performance. He has been watching all day, since President Xi addressed the nation in the morning and on through the afternoon’s talking heads. Now, in the evening, he has invited me to watch the gala while his wife attends to their convenience shop. Kang and I sit on the edge of his bed in their living space, a ten-by-20-foot extension of corrugated metal and plywood that Kang added to their shop last month. The all-purpose room has space for only two single beds, a small sofa and a television, but it is an upgrade from sleeping in the shop partitioned off by a curtain. The television casts a blue glow over the unlit room and softens the lines on Kang’s face, worn by years of political struggle and economic hardship. His eyes sparkle as he reads aloud the tail end of each subtitle: “Our 40 years… multi-ethnic family… great awakening.” For Kang, the evening gala – and the economic transformation that have come with it – have been worth the 40-year wait.

Thanks to liberalized trade policies, rapid urbanization and GDP growth, ‘backwater’ places like Bangdong are finally reaping the benefits”

“China has witnessed a miracle,” Xi declared in his 80-minute speech, referring to the 800 million Chinese lifted out of poverty in the last 40 years. Experts agree. “That’s the equivalent of ten Germanys – Europe’s most populous country,” says Cheng Li at the Brookings Institution. “It’s unprecedented.” While the transformation has been dramatic in the industrialized Shanghais and Shenzhens of China, it has taken longer for rural residents to feel the fuller effects of Reform and Opening. But with those effects finally materializing, Kang and his fellow rural residents aren’t eager for any political shifts. They are fully on board with the message of the day: the Party leads all things.  

Kang remembers well what it was like before Reform and Opening. His grass-roofed mud house was always leaking and his family never had enough to eat. Despite having very little, his family had been labeled “landlords,” prohibiting Kang from continuing school beyond ninth grade. Instead, he joined the Red Guard production team, one of three in Bangdong Village that worked to fill grain quotas. “But people were xiaoji daigong,” Kang tells me, donning his purple bifocals to confirm the characters on my phone: 消极怠工 slack to work.

Mao’s death in 1976 and Deng’s reinstatement to Party leadership paved the way for one of the greatest economic transformations in human history. At the Third Plenum in December 1978, Reform and Opening officially began. Initial reforms focused on attracting foreign investment, allowing private business and de-collectivizing rural land. Special economic zones (SEZs) such as Shenzhen and Xiamen were set up near international trade centers like Hong Kong and Taiwan. Private businesses could operate legally for the first time in three decades. Ambassador Chas Freeman Jr., who served as the  interpreter for Nixon’s 1972 visit, recalls visiting Beijing months after the plenum and encountering his first Chinese entrepreneur: a noodle vendor with a pushcart. “He said he was a geti hu (个体户),” Freeman writes, “an individually registered enterprise.” China’s economic revolution had begun.

It took time for central government policies to reach southwestern Yunnan. Land in Bangdong wasn’t de-collectivized until 1982, Kang recalls. But once reforms were introduced, change happened quickly. Communal land was divided among individual households, which became responsible for the village’s grain quotas. Families could keep any excess production for themselves. That incentive prompted a dramatic transformation. “People would work from sunup to sundown,” Kang said, shifting excitedly on the bed beside me. “The very first year – for the first time in years – people had enough to eat.”

Kang Jiaxin lights a candle at the front of his convenience shop during a power outage

While agricultural productivity continued to increase, unprecedented growth in the SEZs and loosened restrictions on labor mobility led to a surge of rural residents “going out” (zou chuqu 走出去) to the cities for work. Their cheap labor fueled China’s engine of growth. Zhu Hong, now mayor of Bangdong, dropped out of school and moved to Guangzhou to work washing dishes in a porridge shop. “My generation was sending money home to keep siblings in school and improve our homes,” he recalls. “We brought back new skills and different ways of doing things.” And so little by little, the prosperity created by Reform and Opening has trickled down to Bangdong.

A Xiu, now a young mother of two, finished ninth grade then “went out” to work in a café in order to put her older brother through college. She doesn’t really understand Reform and Opening. “My teacher may have talked about it in history,” she tells me. But she does remember eating corn for almost every meal as a child. “Steamed buns and pancakes every day, all from corn flour and water,” she says. “We had meat only during Chinese New Year.” She’s grateful her kids have it better. “They eat meat whenever they want,” she marvels. “It’s like New Year every day.”

As economic reforms began, Deng famously warned the country: “Some will get rich first.” Critics argued he meant Party officials, but Deng asserted that “the rich” – whoever that meant – would stimulate economic development in China’s backward areas to gradually achieve widespread prosperity. Now 40 years later, thanks to further liberalized trade policies, rapid urbanization and average GDP growth of over nine percent since 1979, “backwater” places like Bangdong are finally reaping the benefits.

Infrastructure development has gone into hyperdrive, building interprovincial highways and connecting previously isolated counties and villages. Yunnan alone allocated over $80 billion to road and waterway infrastructure investment between 2016 and 2020. That means better market access and labor mobility for places like Bangdong. It also means more tourists – an estimated 670 million in 2018 – and their money pouring into the “Tourism Paradise of the World,” Yunnan’s official branding by its Department of Culture and Tourism. Growing domestic consumption and international trade has also enabled regions to shift from subsistence farming to cash crops such as tea, coffee, mushrooms and tobacco. For migrant laborers like Mayor Zhu Hong, that means new economic opportunities that allow them to permanently return to their villages and care for young children and aging parents.

A village slogan (bottom) reads: “Once you’re out of poverty, don’t forget the Communist Party; when you drink water, don’t forget who dug the well for you”

China’s backwaters expect continued economic development. The Party released a rural revitalization strategy at the 19th National Congress in 2017 that lays out a development blueprint through 2050: establish an institutional framework and policy system for the strategy (2020), modernize agriculture and rural areas (2035) and create strong agriculture, a beautiful countryside and well-off farmers (2050). Or, as Kang summarized: make rural residents kaikai xinxin (开开心心) happy as clams. Xi’s “targeted poverty alleviation” campaign is also well underway, releasing more than a trickle of assistance for rural areas. “Another 125 poor counties and ten million poverty-stricken rural residents were lifted out of poverty,” Xi highlighted during his New Year address to the nation in February. “Construction has begun on 5.8 million new homes for people living in dilapidated houses.”

Bangdong is in a designated poor county and most residents now live in newly constructed homes, having received stipends and additional no-interest loans from the government. Just last month, cinder block flush outhouses sprang up all over the village, fully funded by the government. From highways to hygiene, Deng’s vision of coastal wealth stimulating inland development is being realized. And the Party is quick to remind rural residents of its benevolence. Walls and billboards across the countryside read: “When you drink water, don’t forget who dug the well for you.”

The Party has its critics, of course. “One hair from nine cows,” He Huize complained to me at a rural wedding outside Lijiang in northern Yunnan. His skin was dark and weathered, his eyes narrow and distrusting. The Party gives a little to the people but keeps most for itself, he explained. In a village near Weishan in central Yunnan, another villager corroborated He’s criticism. “Xi’s policy is good, but the local government is too corrupt,” he stated repeatedly. “Money comes down from the central government for poverty alleviation, but we never see any of it.”

Others complain of the government’s “unforced but strongly encouraged” relocation efforts that move remote residents to government-built housing alongside roads. “It’s not convenient,” one farmer grumbled. “Now I’m a 15-minute motorcycle ride from my fields.” In Wengding, a Wa ethnic village-turned-tourist destination, one villager told me that the “modern” housing design wasn’t suitable to Wa lifestyle. The houses do not accommodate a central fire or the sleeping arrangements prescribed by Wa customs. “The government never invited input until the plan was already moving forward,” she told me. “No one wanted to move,” she admitted, “but the government has ways to persuade people.”

A poverty-alleviation housing project built by the government to relocate remote residents with sub-standard housing or no road access. The community remains mostly empty as surrounding residents consider moving in

Despite the criticisms, however, rural people are Party people. By and large, my conversations in rural Yunnan reflect a positive disposition toward the central Party. Local competence and implementation receive mixed reviews, but Xi’s policies are supported. And the president continues to push for further Reform and Opening, at least in his rhetoric. “It is important for all countries to open wider and expand the space for mutually beneficial cooperation,” he said in November at the first annual China International Import Expo. “[CIIE] is a concrete action by China to advance an open world economy and support economic globalization,” he said. Xi has also pushed to develop additional free-trade zones, including the entire island of Hainan, and to further reduce investment barriers for foreign companies. As China’s wealth and middle class grows, the benefits of those reforms are expected to continue trickling down to places like Bangdong.

Rural residents aren’t eager for any political shifts. They are fully on board with the message of the day: the Party leads all things”

But Reform and Opening are easier said than done. China has faced challenges during the last four decades that continue into the New Era. Trade tensions with the United States are mounting and domestic consumer demand is dropping. A dismal stock market and tightening credit are also features of a slowing economy that the economist Xiong Songzuo at Renmin University recently suggested was growing at only 1.67 percent or even shrinking, well below the government growth target of 6.5 percent. Perhaps those were the challenges to which President Xi alluded in his address for the 40th anniversary: “Every step in the course of Reform and Opening is not easy. And we will face all kinds of risks and challenges, even some unimaginably rough waves,” he portended. Exactly how the unimaginably rough waves will affect China’s policies of wealth redistribution to the hinterlands remains to be seen.

In the back of his convenience shop, Kang watches Chairman Xi’s speech intently. “It is by upholding the centralized unified leadership of the Party that we have been able to achieve the historic transformation,” Xi says, not mincing words. “We must see the Party exercise leadership over all work… In this way, we will create new and even greater miracles of the Chinese nation in the new era, miracles that will truly impress the world.”

Neighbor girls dress up to visit Kang’s convenience shop for an evening snack

On stage, the girl in pigtails is gone. The pink ballerinas and silver hip-hoppers disappear behind a chorus of fatigue-clad soldiers singing ‘Strong Army Battle Anthem.’ One passionate comrade waves a massive Chinese flag fervently through the air. As an outsider, I remain unmoved; the narrative doesn’t connect with me like it does with the millions of Chinese, like Kang, gathered around their TV sets tonight. It feels overproduced and propagandized – a performance of the Party, by the Party and for the Party.

Kang’s story, in contrast, is raw and personal. It is one of human struggle, of transformation and of hope, and it’s just one among millions. Sitting on the edge of the bed, I watch Kang’s face in the television’s soft glow. It is at once proud and tired and hopeful, reflecting the unfolding drama of Reform and Opening. I’m moved.  

Kang’s five-year-old grandson comes into the back of the convenience shop and plops down on the sofa, his face illuminated by a smartphone. Patriotic music plays from the television set. “We must respect the decisions and leadership of Xi and the Party for our continued development,” Kang tells me.

Western criticism of the Party – Xinjiang re-education camps, media censorship, arbitrary rule of law – have little relevance to Kang’s life. But the trickle-down effects of Reform and Opening have been worth the 40-year wait. While there is no guarantee that continued reforms or rural revitalization will come to fruition, given the Party’s record with Xi at the helm, Kang is willing to bet on it.

“We have better lives now,” Kang says pragmatically. ∎

A version of this dispatch first appeared on Matt’s blog for the Institute of Current World Affairs. All photos are courtesy of the author.

Matt Chitwood

Matt Chitwood is a research fellow with the Institute of Current World Affairs, living for two years in rural Yunnan, China in a village of 350 people. His research and writing focus on rural perspectives on life and the world as well as Yunnan's transformation spurred by its economic and infrastructure development. Read more here. Bite-size stories on his Instagram @theotherchina.