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Contrary Indicator

The Real China: Urban Wealth, Rural Poverty

TA PING, China. -- "How should I be happy?" asks 24-year-old Teng Ling Dang, a resident of tiny Ta Ping village, population 103. "I'm poor, and my parents have illnesses."

Teng, who didn't complete primary school, earns 70 renminbi (about $12 per day) working at a brick factory in Luan, a nearby city. His marriage prospects are poor, because he doesn't earn much money. And he can't leave for a higher-paying job on the coast because he must take care of his parents.

To reach this village in the Qinling Mountains, you drive 90 minutes outside bustling Xi'an on a deserted toll road. In China, the infrastructure frequently precedes the traffic. Turning off the highway, you climb into the mountains on a well-paved road that climbs around gorges, past a shallow, rushing river where water spills rapidly over large boulders, past a temple complex nestled in a small valley. The small bus beeped loudly every time it rounded a switchback. After 45 minutes, we pulled off the main road into the village -- about 40 yards of paved road flanked by a couple dozen buildings with terra cotta roof tiles, and braids of drying corn nailed to the wall.

Here, 28 families scratch out a meager existence. The children have left for schools in larger towns, and the able-bodied who can seek work in the cities. The rest go into the mountains to gather herbs, grow some soybeans and corn, or subsist on extremely meager pensions of about80 renminbi ($15) per month.

Here's some breaking news for the China bulls: Despite the gleaming towers of Shanghai, the monumental glass-and-steel sprawl of Beijing, the massive airports and high-speed rail networks, this is a very poor country. The urban China of bourgeois living, brand names and chic restaurants is real and growing.

But the denizens of modern China are only 20 years removed from the poverty of Ta Ping. And a huge chunk of the country remains trapped in it.

"China is in the process of developing from a poor country to a rich country," says Wen Hai, a senior professor of economics at Beijing University. "On the one hand you have the people on the coasts, and then you see the backwater."

Poor, rural and lacking hope, the villages are the mirror images of China's cities. And economic conditions in villages like Ta Ping are one of the reasons China remains an extremely poor country even as it acquires the trappings of a wealthy one. Half of the population lives in rural areas, but this half only accounts for about 10% of GDP.

While global markets are the all-powerful force changing life in the cities, the Communist Party remains supreme in the village.

The three-room home of Qi Jiao features a few bare light bulbs, a wood-burning stove, cement floors, a television -- and a huge poster of Mao Tse-Tung. "Other people put posters of God," said Qi, who collects herbs, but would like to be a migrant worker. "To me he is God."

The party -- or the government, they're virtually indistinguishable -- sustains life here. The most modern structure in the village is a small meeting hall, dominated by a flag baring the hammer and sickle. Here, Chang Qi Yao, the party secretary responsible for the village, told us how his job had changed.

Lapsing into MBA speak, he noted that it is "transforming from a management to a service model." His primary role used to involve "teaching people about Socialism with Chinese characteristics," collecting taxes and making sure people complied with the family planning policies. Now, however, he sees his job as "delivering social services, helping to build structures," and generally promoting economic growth.

As residents plied us with walnuts and cheap cigarettes, Chang and the elected village leader Deng Chang Lin described how in recent years the government had paved the village's road, strung up electrical wires and fixed buildings. "Government officials have come to the village three times to help repair roofs," said Deng.

But there are limits even to what China's government can do for villages like this. China can't be a fully modern society so long as a huge chunk of its population lives like this. "The key issue is urbanization over the next few decades," notes economist Wen Hai. "You have to make more farmers leave the countryside and then integrate into the urban areas."

And so the services that the government is likely to deliver to Ta Ping in coming years will likely involve dismantling the village. The population here is slowly dying, and many of the working-age people are trapped. The government is making plans to move populations in this village and others to new developments in cities where there is work and a future. The families of Ta Ping village have been living here for many generations. But village leader Deng Chang Lin knows this may be the last.

What will your kids do when they grow up? I asked. "They will go to Lu'an town," he says. "They will definitely go out of the mountains."

Daniel Gross is economics editor at Yahoo! Finance.

Follow him on Twitter @grossdm; email him at grossdaniel11@yahoo.com.

 

261 comments

  • Anonymous  •  6 months ago
    I've actually lived in China for several years and although things are developing quickly business wise, the poverty in the country side areas is no joke. Don't get me wrong, I stayed in an Anhui country side place. Certainly it was very poor, but the people had a very big heart, were very friendly (much friendlier than the educated city people), and if you need help, the villagers will go out of their way to help you.

    I saw some Americans commenting on how beautiful the villages are and this is true, but I think most Americans wouldn't be able to handle living there. How so? First of all, many of these places have either very cold or hot and humid weather. Many or most of the homes have no insulation, no heating or AC, and since there are few or no super markets around, people just pick their own vegetables and kill their own meat. The vegetables may be fresh, provided air pollution from the construction didn't damage them, but the meat, most Americans may not be able to handle. People really do eat things like dog, cat, snake, wild birds. I am not saying this to make fun of them, but to give you an idea as to what it is really like. Don't get me wrong, as long as I can at least have electricity, running water, heating/AC, and some food that is not dog or cat, the country side areas are more pleasant to live in. This has to do mostly with the people. The people in the villages are usually wonderful. This is not to say they don't have bad people, but usually they are way more friendly than city people.

    I taught for several years at a Chinese university, and most Chinese students I've interviewed see China as being in a similar, although not entirely the same, as Japan. Right now housing in China is horribly expensive, even in rural locations, and people on average DON'T earn much money. By expensive, I am talking about paying $150,000-$500,000 for a very, very small apartment. Try doing this while making only $5000 a year (the average urban Chinese salary). Again, this is not meant as an insult, but to paint a realistic picture of how hard people struggle and work. The reason people have fewer financial problems is because families pool their money and resources together, and people typically avoid debt; however, this is changing for the younger generation.
    • joe 6 months ago
      Well written! Makes you think about what is really going on in China today.
      I was there in l986 and saw the poverty. They were just starting to renovate Bejing and Shanghai. Is it to much, to soon?
    • Harold 6 months ago
      Yep, there's a disparity and the city prices have been jacked up due to speculation. Fortunately, China's smart enough to deflate that bubble slowly rather than allow it to pop in some horrible disaster. Giving workers time to transition away and developers time to finish up projects. This is also being pushed faster by providing tens of millions of units of affordable housing in the major cities, which is targeted for fresh graduates and low-income.

      Price controls also have seriously been helping. Food and energy costs in the countryside are dirt cheap compared to the city and this is in no way an accident. Gas is also cheaper. You just pay more in the city and that's that. This unnatural price distribution not only allows for cheap base expenses in the countryside, but also gives an opportunity to sell produce for higher prices in the cities and that money ends up in the rural areas.

      China is also still a very mobile society. I have an ex who came from a poor family. in a very rural area, a good 2-3 hour bus ride from the nearest city and half of the roads unpaved. The place looking generally the same as it did 1500 years ago when the village was first settled. Her grandparents had ties to the KMT and they lost everything during the war with her parents paying the price until the late 80s. Both parents took advantage of reforms, went to training schools and became doctors. Doctors in China don't make big bucks, but it provides a stable life even at the tiny hospital they were based at. My ex studied hard, earned every grade her entire life, went to college (for free with a stipend) in a provincial school and then finally ended up in Beijing for her masters (also for free with a stipend) where I met her. She is now solidly in the middle class, pulling in around 18,000 RMB a month at a state owned company with another 10,000 or so on the side, living in company-provided housing, eating company-provided meals, getting free healthcare and saves every fen she can to send home. Her hukou is now permanently based in Beijing and she is eligible to buy into company-subsidized housing at a huge discount. Not a glamorous life of riches by any means, however it's something she did entirely on her own and she provides not only for her parents, but spreads that success to the entire extended family giving them more opportunity.

      My wife's family comes from a similar background, but her parents joined the military for 2 years to get out of the mountain village. Schooling also for free. The simple fact here is that no matter what your background, if you apply yourself towards self-betterment and have a family which has reached a point of stability, yes, you can drastically change the life of the entire family in a single generation and share in the boom. Chinese don't drop out of school, as it is a path to prosperity. Jobs are plentiful, opportunities are endless if you have any view and no degree is worthless. In neither of these cases were the women the "best and the brightest", many of their classmates who were successful in their studies either advanced further in their education or got off and found local opportunity.

      I think the main point to take away here is that no one is starving, society is not stuck in a rut and with just a little application, opportunities are boundless. This is a very mobile society.

      For the record, I have been living in China for over 10 years, went to school here for college and am a recognized contributor well on his way to landing permanent residence next year. The notion that this "Daniel Gross" feels he can decide to get on a bus, get off at a random stop and write some garbage which he tries to pass off as a story is just a joke. He has no place here, has no perspective and should just stop trying already.
    • noway 6 months ago
      Village life is still hard, but has been improved quite a bit since 1979, when China started to reform and open up. TV, electricity, running water, motorcycles, appliances, foods, clothings are all available to everyone now. Infrastructures are greatly improved. Schools and hospitals are better equipped. People have hope, they think their country will be more prosprous year after year. So will they.
  • Anonymous  •  6 months ago
    For people living in America, the grass is always greener on the other side, and the same goes for many people living in China. Either way, regardless if America is developed or China is rapidly developing, average people in both places have immense financial struggles. Because China is doing well and looks good from a numbers and statistics point of view (the bean counters perspective), people ignore the fact that the average salary is less than $10,000, yet the average price of a home in a major city like Shanghai, Beijing, Guangzhou, or Shenzhen (where most of the jobs are) will cost you anywhere from $100,000-$500,000. Try affording this on less than $10,000 a year. It's very hard for the average Chinese, even if the family helps. My point is that people in China have challenges just as in America, and the grass in not any greener on the other side for the common man.
  • stedv  •  6 months ago
    Funny how a hundred years ago the British sent the Chinese opium to make them dumb and lazy.Now the Chinese are sending us cheap credit,and cheap gadgets to make us dumb and lazy.
    • Wklptrs 6 months ago
      Stedv,you did not read your history books, after the Chinese government ban the sale or import of opium into china,the British government fought the OPIUM WAR to force the Chinese government to rescind the ban.IMAGINE the humiliation for the Chinese,.....can you imagine the same analogy today for any country.History is full of injustices but people should forgive but never forget.
    • Obviously 6 months ago
      I think the chinese are saving the best for the brits....see the turmoil in europe? that's just a precursor to total collapse.
    • xnbiibw 6 months ago
      Hey Obv, the Chinese didn't bring the European turmoil but the Chinese are trying to buy influence and goodwill by helping with the debt problems there. "Total collapse," such pessimism.
  • Regal  •  6 months ago
    Strange. I thought everyone was equal under communism.
    • FrankieV 6 months ago
      Only in the eyes of the OWS stoogies.
    • Tomombo 6 months ago
      You're confusing communism with socialism.
    • Yl 6 months ago
      it is not equal in china . what you can see from the video can make you think that china is a developed country . it is not truth. people in china are getting used to lies .
  • Eagle  •  6 months ago
    I stay in Stanford hosiptal for one night without any operation, just observation, and it costs me $72,867.97....... That money could provide 100 years for for the whole village.......
    • normand 6 months ago
      d ont pay you are being robed
    • oldanddon'tcareanymor ... 6 months ago
      Which would not have been a bad deal except that a blue paper "robe" that doesn't quite cover your butt should not cost $83.
    • Ricardo C 6 months ago
      that is so sick...f****thieves....
  • Rick H  •  6 months ago
    Many will remain impoverished HERE as well in the U.S.S.A. once the communist mentality and way of governance takes hold. So much for the proletariat rising up in masse to achieve a better quality of life. LOL
  • yahoo  •  6 months ago
    Why don't people talk about how to solve our own economic problem instead of thinking how badly China is doing. China may have huge poverty problem in the rural area but they have been poor a long time and things can only get better. Here, we are doing from good to bad and better to worse. Our middle income is shrinking and our politician do not have the political will to reverse it. Not sure how effective is China's policy but unless we are doing better here, we should just shut the f''k up and focus on our own problem before China really catches up.
    • Steve Jackson 6 months ago
      Funny how the world wide web has stories about, um, the world.
    • MattM 6 months ago
      People do talk about our own economic problems. I'm so sick of people complaining about journalism just because there are articles that don't represent exactly what's on their mind.
    • Henry Mohr 6 months ago
      Having visited modern China and other far Eastern nations on business over the last 20 years, a major cultural shock is the almost unchecked corruption of many public officials and government employees. Even business purchasing practices are rift with kickbacks. This adds tremendous cost to doing business and living there. It also creates a certain feeling of despiration among the poor and tax cheating becomes a prime consumer activity. The two countries that do not operate this way is Singapore and Korea. It is difficult for the average American to understand the typical Chinese or Indian daily routine or difficulty in providing for a family.
  • TC5  •  6 months ago
    Countries within the European Union are hoping that China will use its reserves to help bailing out its insolvent members. With hundreds of millions of people living in conditions like this, how can that be justified?
  • Jerry  •  6 months ago
    This is not new news.This situation exists in many countries especially developing nations.It even occurs is so called developed nations.Go from Chicago or New York to Mississippi or Alabama.Wage differances and poverty exist.To make $12 a day in China in a country village is somewhat relative to the cost of living.There $12 dollars may be like $60 to us and that is only what a lot of people make if they are lucky enough to have a job
  • xw  •  6 months ago
    I was in China. In XiAn for 10 day in early Oct.... China is not as the rosie pix as the government's showcase. Very bad... However, it is not our business. We ahve to take care of our business.
  • P. Rathbun III  •  6 months ago
    Is it right for a country that has laws against slavery, indentured servitude, and the general abuse of laborers to outsource manufacturing and import goods from countries that do not? You will find few people of any political stripe who will say yes, particularly from amongst those that shop at Wal-Mart.
  • Vik  •  6 months ago
    What's the big discovery about this? All developing countries have rich urban areas and poor rural areas. Is this something the author has found out for the first time? This can be seen in most Asian developing countries. It takes time to get to a developed state...is that surprising to the author?? This is a dumb article.
  • JohnT  •  6 months ago
    20 years ago, all of China was like that. This is certainly a "glass half empty" article.
  • EUGENE  •  6 months ago
    they were just showing on t.v the americans now going there to work
  • William Boyles  •  6 months ago
    You conveniently forget to mention that 100 million rural residents a year are moving out of poverty. Also, millions of those living in the cities are young people sending their paychecks back to rural areas. Come on -- a little honesty here instead of sensationalism.
  • Marie  •  6 months ago
    Hmm...It would seem that America and China are on opposite courses...China going from poor to rich and the US going from rich to poor. One common thread...the US has led the charge in both cases.
  • terryt  •  6 months ago
    Communism, Capitalism, if your take home pay won't take you home , the shackle around your wallet is just as effective as the one around your ankle
  • shine-ee-teeth  •  6 months ago
    Dan- come visit me in the arkansas delta or go hiking in appalachia.

    for those of us wanting to maintain a traditional way of life, corporate capitalism is the "village party leader" actively works to make it impossible.

    for those of us wanting to betray our heritage (and usually our families) for economic gain, corporate capitalism is the savior.

    limit corporations. unbridle free markets. systemic risk is a myth. productivity is corporate code word for enslavement.
  • Robert  •  6 months ago
    Call me ol' fashioned,but some of us like the simple/traditional life vs. the RAT RACE of "urban exsistance!" We know how to "do without and like it!" We will be and are the foundation of what it is to truely live uninhibited and self sufficient, to carry on traditions, and be true to the end! Most people judge us for what we dont have;which makes them blind to the freedoms we do have. Kudos to those that live in the "villages" of the world. My defination of progress is: Mans attempt to take something that works and screw it up!"
  • David Mcclellan  •  6 months ago
    An accurate report but you don't have to go up into the mountains to find such poverty in China. You can just go behind the facade of modern buildings in any city that surrounds each block and there you'll find living conditions that would horrify you.

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About Daniel Gross

Daniel Gross joined Yahoo! Finance in the fall of 2010 as columnist, economics editor, and a co-host of The Daily Ticker. The best-selling author of six books, including Forbes Greatest Business Stories and Dumb Money: How Our Greatest Financial Minds Bankrupted the Nation, Gross has been covering politics, business, and economics for two decades. The longtime “Moneybox” columnist for Slate, he was a staff writer and columnist for Newsweek and a contributor to the “Economic View” column in the New York Times.

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