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The Real China: Urban Wealth, Rural Poverty

Daniel Gross

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.