Poverty in Vietnam and China

According to today's Financial Times, the 'eradication' of poverty in China has actually been going in the other direction since China joined WTO in 2001. Three quarters of rural households are expected to suffer a cut in real incomes between 2001 and 2007.

ICFTU says that membership of the WTO has boosted the incomes of those already benefiting from China's economic reforms: private enterprise capitalist and white collar workers. The losers have been blue collar workers, farmers and unskilled office workers, "whose income has remained stagnant for the last 10 years".

About 250m people still earn less than $1 a day, the official measure of poverty, and 700m, 47 per cent of the population, live on less than $2 a day. As a result, "the people who provide everything from T-shirts to DVD players to the world's consumers often have 60-70 hour working weeks, live in dormitories with eight to 16 people in each room, earn less than the minimum wages that go as low as $44 per month, and have unemployment as the only prospect if they should get injured in the
factories", says the ICFTU.

It warns that China will need to create 300m new jobs over the next decade to compensate for job losses in agriculture and at former state-owned enterprises - which is "much higher than China's current job creation capacity".

Unemployment and inequality therefore would continue to rise "if the Chinese government's strategy for further growth, employment creation and poverty eradication is based only on securing a larger share of global trade".

Since 1995, the number of companies under state control has halved, shedding 59m jobs, while emerging private enterprises have created only 16m jobs, according to the International Labour Organisation.

Guy Ryder, ICFTU general-secretary, said: "Most people seem to have been too blinded by China's economic results to see the dark side. Domestic concerns, such as their own trade deficits and the jobs they might lose from cheap Chinese imports, have overshadowed any doubts the international community may have about exactly how Chinese companies are able to produce DVD players that sell for less than $50."

All of this is reflected in growing discontent. The number of so-called 'mass incidents' (sit-ins, riots, strikes and demonstrations) each year has grown 7-fold since 1994 and the number of participants by 5-fold. In 2004 there were 74,000 such incidents with about 3.7m people. The number of petitions to the central government has also reached a record high.

Luckily for Beijing, brewing social unrest has not precipitated a nationwide crisis, and participants in these incidents, localised and poorly organised, have yet to form an anti-government movement with mass appeal. Most incidents are triggered by specific grievances (unpaid wages, high taxes and arbitrary land seizures). The government occasionally appeases protesters by punishing local officials or redressing these grievances. If that fails, the authorities can always call on well-equipped anti-riot police. (FT 6/11/05)

This sounded somewhat like Vietnam to me, although in that case the number of incidents does not seem to be rising, the main reason for them has always been land rather than unpaid wages or taxes, and while the armed forces have been used to restore order, the more frequent response is to send in the Prime Minister or Party Secretary to solve the problem. Maybe the difference lies in the paragraph below from the same article.

At a more fundamental level, China’s investment-driven growth strategy, which powers economic growth with excessive physical capital but short-changes practically everything else, is generating crushing social strains: environmental degradation, a collapsing public health system and neglect of the poor. The resulting social discontent is further amplified by an unresponsive authoritarian political system with few pressure valves. Ordinary Chinese citizens have little recourse for redressing grievances. The official petition system, which ostensibly enables aggrieved individuals to seek intervention by higher officials, has broken down. Only two in 1,000 petitions actually lead to some kind of resolution. Chinese courts offer little judicial relief. They accept only about 90,000 lawsuits against local authorities each year and rule against the government in less than 25 per cent of the cases. On rare occasions, Chinese media may publicise a particularly egregious case of official abuse of power, and subsequent public outrage forces the central government to act.

The first sentence seems to correspond closely to the Vietnamese case, but I think the responsiveness of the Vietnamese authorities is greater (except in the case of certain ethnic minorities who continue to suffer from government paranoia deriving from earlier associations with US-supported separatist movements). Nevertheless, given the similar underlying causes of continued poverty and unrest, it will be interesting to watch whether and how far the two states diverge in their management of the problem in future.