SPECIAL REPORT: Progress Goes Hand in Hand with Challenges in China

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By Hiroshi Nagai and Taro Ichikawa in Tokyo

China's great economic and social progress has lifted several hundred million people out of poverty and succeeding in feeding one-fifth of the entire world population. Nevertheless, the most populous nation on planet Earth is faced with some veritable challenges.

According to the UN Special Rapporteur on the right to food, Olivier De Schutter, the absolute number of poor fell from 652 million to 135 million between 1981 and 2004. Food security benefited significantly from this overall progress.

With a population of 1.3 billion and a surface of arable land of 121.7 million hectares, China has 21 per cent of the world’s population, 8.5 per cent of the world's total arable land and 6.5 per cent of the world’s water reserves.

"Yet, thanks to the impressive progress of agricultural production by 200 million small-scale farmers with an average holding of 0.65 hectares, it has moved since 2005 from being a beneficiary of food aid to being a food aid donor," notes De Schutter concluding his first official mission to China from December 15 to December 23, 2010.

Following a series of bumper harvests in recent years (530.8 million tonnes of grain were produced in 2009 -- an increase of approximately 13.1 per cent compared to that in 2004 -- and 546 million tonnes in 2010), China has achieved a grain self sufficiency rate of at least 95 per cent, and its grain reserves are estimated to be more than the double of the 17 per cent safety level recommended by the UN Food and Agriculture Organisation (FAO).

De Schutter's mission included meetings in Beijing, as well as field trips to the districts of Tongzhou and Changping, and to the areas of Jinan and Laiwu in the province of Shandong.

The mission took place while the 12th Five-Year Plan to be adopted in March 2011 is under discussion, and while the drafting of the 2011-2020 National Poverty Alleviation Plan is underway. The Special Rapporteur, therefore, hopes that his preliminary observations and conclusions in a six-page report can feed into these processes.

Using the current international measure of poverty of $1.25 per day in 2005 PPP (purchasing power dollars), the number of poor was 254 million in 2005, the latest year for which direct survey-based estimates are available.

(Purchasing power parity is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries. This means that the exchange rate between two countries should equal the ratio of the two countries' price level of a fixed basket of goods and services. When a country's domestic price level is increasing, that is, a country experiences inflation, that country's exchange rate must depreciated in order to return to PPP.)

"At the same time, however, the massive transition of the Chinese economy and society over the past generation, as well as the threats represented by land degradation and climate change, have brought about their own challenges," De Schutter adds.

Industrialization and urbanization have been increasing pressure on farmland. Since 1997, China has lost 8.2 million hectares of arable land due to urbanization and forest and grassland replanting programmes, as well as damage caused by natural disasters, and the country’s per capita available land is now at 0.092 hectare, 40 per cent of the world average.

"This shrinking of arable land represents a major threat to the ability of China to maintain its current self sufficiency in grain," warns the UN Special Rapporteur. This is because China has adopted the principle according to which any cultivated land lost for other purposes should be reclaimed elsewhere, and it has set a 'red line' at 1.8 billion mu (120 million hectares) beyond which arable land will not be allowed to shrink further. "But China is already dangerously close to this limit."

INEQUALITY

Another source of concern, according to De Schutter, is that inequality has risen rapidly and in large proportions. The Gini measure of inequality increased from 0.329 in 1990 to 0.443 in 2005, even adjusting for rural-urban cost of living differentials, and could be over 0.5 today. The urban-rural income gap widened from 2.79 to 1 in 2000 to 3.33 to 1 in 2007, and if distribution of spending on public services is taken into account, the urban-rural ratio reaches 5-6 to 1.

(The Gini coefficient is a measure of the inequality of a distribution, which was developed by the Italian statistician Corrado Gini and published in his 1912 paper 'Variability and Mutability'.)

"Because of such increases in inequality, overall progress in food availability coexists with the persistence of food insecurity in certain areas for some groups. In the eastern region, the food output per capita is low but the income level is high and food access is good. In the central region, food supply is relatively sufficient but the income level is lower. The western regions face poorer conditions in all these aspects, and there is a wide gap between urban and rural residents in terms of food consumption structure and nutritional status," explains De Schutter.

Although precise figures are unavailable, he adds, a November 2009 report commissioned by IFAD (International Fund for Agricultural Development), FAO and WFP (the UN World Food Programme) that there may be food insecurity in poor counties in 9 provinces and autonomous regions. Five main challenges remain.

These are: bridging the gap between the urban and rural areas; ensuring security of tenure and access to land; feeding China in 2030; improving nutrition; and food safety as well as the contribution of basic freedoms to the right to food.

BRIDGING THE GAP

An important pillar of efforts to improve living standards, including access to adequate food, consists of efforts to put in place an effective social security scheme, so that those whose living standards fall below a certain threshold are entitled to various forms of State assistance.

The Special Rapporteur commends the Chinese Government for its efforts and stated policy objective to establish a social protection system covering all urban and rural residents, including basic old-age pension, basic medical care and the minimum living standard guarantee (di bao) scheme.

Progress has been faster, however, for the urban residents, and important gaps subsist between them and the rural populations, he says. For instance, the di bao, introduced in 1999 for urban areas, has since 2007 gradually been expanded to rural areas.

However, rural residents receive on average less than half the amount a month compared to urban residents. While this is explained in part by the fact that rural residents have access to land under the Household Responsibility System, differences also exist in access to basic health care and to old-age pension.

According to De Schutter, one major reason for the widening of the rural-urban gap resides in the fact that local governments have insufficient revenues to fulfil all the tasks assigned to them. A large number of essential services, including education, healthcare and old-age pensions are provided at the local level. It is estimated that local governments finance 80 per cent or more of basic health and education expenditures.
While levels of subsidies from the central government are significant -- fiscal transfers (excluding tax rebates) from the centre to local governments increased from Rmb 435 billion in 2002 to Rmb 2.4 trillion in 2009 -- there remains a high inequality in the distribution of medical and health resources. In 2005, only 25 per cent of public health resources were devoted to rural residents, although they make up close to 60 per cent of the total population.

Although necessary, argues the UN Special Rapporteur, further transfers may not be the most efficient way to address this problem, because of the difficulties in monitoring the use made of earmarked funds by the local-level authorities.

"Rather, consideration could be given to recentralizing the provision of certain public services, for instance the payment of old-age pensions and of the salaries of teachers, or basic health care costs, to ensure that the local governments will not be obliged to compensate for the gap between their revenues and their expenditures by relying on user fees."

Rural migrant workers occupy a specific position in this debate concerning the gap between the rural and the urban levels of public services. Over the past decades, some 144 million people have migrated from rural areas all over China to work in urban areas, particularly in the Eastern provinces.

Since an estimated 20 per cent of all rural migrant workers move with their family, the total number of rural-urban migrants is estimated to around 170 million. These migrants are often excluded from social services and social security benefits, including the di bao guaranteed to urban residents.

In part, this stems from the fact that the vast majority of rural migrants (probably around 85 per cent) work in the informal sector, which increases their vulnerability to abusive labour conditions, including non-payment of wages.

Another source of exclusion is the household registration system (hukou), the result of which is that, depending on their place of registration, individuals have different entitlements to basic services in the areas of health, education, and basic income guarantees.

A key challenge is to integrate the fast-growing population of rural migrants into the urban social security schemes through programmes which are tailored to the specific situation and needs of this population group, observes De Schutter.

A number of provinces or municipalities, most recently Shanghai as regards health care, have taken steps in this direction by launching pilot programmes to abolish or limit the impact of the hukou system and to include migrant rural workers in the basic public service system.

This often only benefits rural migrant workers engaged in formal employment, however, which are a minority among the migrants. In addition, for this to be fiscally sustainable -- for the public services of the concerned cities to be able to cope with the increased demands imposed on them -- it should be ensured that the revenues at their disposal will be sufficient. This again illustrates the importance of fiscal reform, says De Schutter, who works in an independent and unpaid capacity for the UN. - IDN-InDepthNews

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