How can Chinese farmers not be poor?
Li Changping
(a former township party secretary, Master of Economics)

In recent years, I mainly traveled to national level poverty counties in Yunnan and Guizhou. I went to some very poor places. I discovered the cause of poverty is not simple, and includes a low level of development in farmers themselves, a lack of education, ignorance, poor natural environment, and other causes. We attribute the cause of poverty to poor people, as if poverty has nothing to do with the government, the system, and mainstream society. That's not true! To a great degree, poverty is rooted in not having rights, in an irrational system designed by mainstream society.

Let me start with a story. I came to a township in Bijie, Guizhou. This township has a population of 14,000. It has a tin mine, lead mine, and coal mine. Each day, ore shipped from this township is worth about RMB400,000. The mines are owned by "big bosses" from Zhejiang, Sichuan, and Yunnan. The taxes they pay to the local township government are less than RMB500,000. Vehicles shipping the ore out damage the roads, and every year no less than RMB1.5m is spent on repairing roads. The minerals are exploited, the resources are gone, the environment is destroyed, the mines poison the environment and the miners have no labor protection. Each miner can only work three months in the mines, after which they are no longer able to work. If they work longer, their lives are in danger. These workers are paid less than RMB300 per month. If you see the miners at the mine, your first impression is that they are no different from cattle. People who do not live in that environment can not understand them. Theirs is a real choice, they would rather die from honest labor than to die of hunger.

You can say this place is poor, but so much wealth is shipped out of it everyday. I calculated roughly, per capita GDP in this place should exceed RMB10,000. But per capita net income is less than RMB700. What kind of GDP is this? I have a name, it's garbage GDP! Isn't development a priority? Resources are developed, capitalists get rich. What share of development do local people have? They have gained nothing. On top of it, they are victimized, their houses are falling apart, their yam cellars sink into the ground several dozens of meters, water seeps away from their reservoir, 厎.

A second story: I went to a poverty county in Yunnan. The primary forest there was cut down in the 1990s. When the trees were felled, no compensation was paid, because mainstream society says forests belong to the state, so cutting down the trees naturally had nothing to do with local people. When the forest was cut down, locals were living mainly on hunting, plus some simple agriculture, and their lives were pretty comfortable. After the trees were cut down, locals were forced to turn from hunting to agriculture, and they toiled and toiled to build terrace fields. In recent years, mainstream society decided to protect the environment and prevent erosion. So the government forced the locals to stop tilling the land and turn their fields back into forests. When the forests were cut down, no compensation was given. Now they are receiving 150kg grain per year for five to eight years in compensation for the fields they sweated blood to build. How are they going to live after those five to eight years? I was there. I felt ashamed. Ashamed for the hypocritical morality of our mainstream society. Many people are kind and loving when they talk about protecting animals, but ruthless when facing their weaker brethren!

When I faced poverty at the depths of poverty, I found no reason at all to denounce people struggling in poverty. They are not in the wrong! After thinking about this for a long time, I gained a new understanding of poverty.

1. The system and poverty
There are at lease a dozen irrational systems that restrict the rights of poor people and cause poverty. We should review these:

1) The ownership system
These two stories above are both related to the ownership system. The government simply says: mineral resources belong to the state. This statement severs the link between the people where the resources are located from the resources themselves. "State-owned" means owned by whom? Whoever has the power to examine and approve mineral exploration, that person represents the state. Who has the right to explore state-owned mineral resources? According to the system, only capitalists have that right. Local people are merely citizens. We can't find a place for them in the system. Some might say, citizens share the taxes, don't they? Who is collecting the taxes for the state? A few people of course. For each ton of coal the tax is RMB35 to RMB50. But one train carriage with 10 tons is taxed only at the rate for five tons. Ten trains that ship during the day time are taxed, but the 100 trains that ship at night are not taxed. So even if the tax is collected, how can the locals realize their right to share in the benefit of the taxes?

If you say the forests and mineral resources belong to the state, and poor people are not able to share in any of that, we can leave it at that. But the "state" even wants to obtain property that originally belonged to poor people.

For instance, if farmers pool their funds to establish a power plant, who does it belong to? It belongs to the State-owned Power Corp. Farmers pool their funds and build a school, who does it belong to? It belongs to the education authorities representing the state. If farmers pool their funds and build a factory, it also belongs to the state. If farmers pool their funds and establish telephone lines, they belong to the MII. Highways, bridges, reservoirs, etc., everything built by farmers with their own money does not belong to the farmers. Since they used their own money to build these, why don't they benefit from ownership? If we allow farmers to share in ownership and dividends from power, transportation, energy, telecommunications, and other infrastructure facilities, farmers would not be so poor, so hard-up. Who deprived poor men of their ownership rights?

That is not all. During the late 1980s in the last century, the state encouraged farmers to build grain processing plants. One plant requires several hundred thousand yuan in investment, or even millions. In the 1990s, the state sent down a document barring farmers from handling grain trade. The farmers lost badly! The state bore no responsibility. In the 1980s the government encouraged farmers to sell pigs and butcher pigs. In the 1990s, pigs were only allowed to be butchered in "designated places." So "chain" pig abattoirs established by farmers all collapsed. No one received any compensation. In the late 1980s, farmers were allowed to be engaged in seed, pesticide and chemical fertilizer trade. By the 1990s, these were put in the hands of state-owned co-ops again, and farmers were victimized. Debt incurred like this cannot be repaid by one or two generations. When urban enterprises go bankrupt, they don't pay anything. When farmers' enterprises go bankrupt, they have to repay their debt. How can farmers not be poor!

2) The fiscal system
Rural power lines and telephone lines are built with money pooled from the farmers themselves. Power lines and telephone lines in the cities are state funded. Electricity and telephones for urban residents are cheaper than for rural residents. Schools in the countryside are built with the farmers' own money. Teachers in rural schools are paid by the farmers themselves. Schools in urban areas are built by the state. The salaries of urban teachers are paid from the state treasury. Highways in cities are built by the state. Each kilometer costs several million or even tens of millions of yuan. Rural highways are mainly built by farmers themselves. After farmers build highways, the state goes and collect the fees. When the roads breakdown, farmers repair them again. Almost all infrastructure facilities in the countryside are built with the farmers' own money. Of course there is some state financial support, but that's like "a cup of water to put out a fire on a cart of kindle wood". We are all citizens of China, but in terms of sharing fiscal resources, standards are not the same. That Damanshanhong village in Jianchuan county, Hetaoshu township got its own electricity by using the farmers' money. It took 40 men to carry each pole two days from the bottom of the mountain to the top. They were not able to go home in the middle and had to spend the night outdoors. When did urban residents do anything by themselves?

3) The social security system
China's social security system does not cover farmers. I won't even talk about the extreme injustice of this, because there is no use. But, on top of that, mainstream society goes on to destroy the social security system farmers have set up for themselves. The "Rural Land Contract Law" that came into effect March 1, 2003 stipulates that contracts for land will not change for 30 years or 50 years. Say I am 15 or 16 years old this year, after five or six years, I must get married and have kids. My family has no land at all and the government gives me no subsidy. The social security system does not cover me. How am I supposed to survive?! Living in the countryside, being a farmer, one should naturally have the right to own land. Who has the right to deprive others of the right to a livelihood?! No law must violate the "Constitution." The Constitute says human rights must be protected. The most basic rights of farmers is to own land, to own the right to a livelihood. From the point of view of urban residents, the "Rural Land Contract Law" is a very good law. It fixes land contractual relations which can generate more and cheaper agricultural produce for the consumption of urban residents. But we have not given consideration to farmers living in those poor areas. Once they lose their land, how are they going to make living? What kind of social security are we providing for people who have lost their land?

4) The banking system
Banks in China are called the "People's Bank of China" and commercial banks are called state-owned commercial banks. Urban residents can take out a loan to buy a house with their personal ID. Rural residents can not. Urban residents can mortgage their house to get a loan. Farmers' houses are also houses, why can't they use their house and land to obtain a mortgage and get a loan? Farmers are also citizens. Why won't state-owned banks recognize them? Farmers' wealth is also part of the nation's wealth, the foundation of the RMB. Why won't banks in China recognize them? If our farmers personal IDs, our mountains, our fields, our houses, can be mortgaged by banks, then the countryside would not be short of investment. Farmers would then have money to develop. At present, farmers take out loans to produce agricultural produce for urban residents to enjoy. It is extremely difficult for them to get a loan, and interest rates are several times higher than in cities. Foreign hands are not allowed in the countryside. Chinese banks stay in the cities only too. The state will not allow rural private banks to exist. Are the farmers supposed to get financial services from aliens?!

5) The tax system
The per capita income of farmers is over RMB2,000 per year. This is not disposable income. Seeds, grain for food and grain for feed has to be paid for out of this. The state collects 8.4% of rural household output of agricultural produce as an agricultural tax. If we exclude what farmers consume themselves and what they reinvest into production, then this tax rate becomes over 20%. If we take into consideration the tax rate in the cereal processing process, then agricultural tax rate would be above 30%. A farmer only has a few hundred yuan of disposable income every year, and must pay tax on that. Urban residents enjoy several hundred yuan in social security each month. If an urban resident goes into business and loses money, he can quit. If a farmer farms and loses money, can he quit? If he quits can he be exempted from taxes? No. He must still pay taxes. Agriculture is the weakest of all industries. Farmers are the weakest of social groups. Yet they face the most unrelenting tax policy. How can farmers not be poor?

6) The resource allocation system
Let's look at the resource allocation system for poverty relief. State poverty relief resources are funds that belong to the poor. Who allocates these resources? Cadres. Who ever bribes authorities in a higher position gets more money. These resources are therefore obtained at a cost, and allocating the funds to lower levels involves commissions at each level. When these resources finally arrive at their project location or community, the poor people for whom the funds were intended still have no say in how these resources are used. This is still a decision for the state's cadres. Many poor areas host project tenders. Who controls these? Cadres. Who has the right to take part in the bids? A small number of rich people. Where are the poor people? Poor people, who account for 99% of the population, are kept out.

We handled poverty relief in the mountains of Guizhou, where each kilometer of a five-meter wide mountain road can be built for less than RMB10,000. But when government carries out poverty relief, the same road costs RMB80,000 to RMB100,000. So, how do we allocate these resources? We go to the villages and talk with the people. The masses say "We want to built a road", so we ask them how. They say, all the government needs to provide is dynamite, iron hammers, stone crushers, steam rollers and technicians. They will organize the labor themselves. This way, each kilometer of road can be built for RMB3,000 to RMB8,000. We gave them the money and acted as coordinators. We bought the dynamite, machinery and iron hammers to the villagers. We worked in the wind and rain. For two years, we built 26 km of highway, for RMB60,000. If the same road were built by the government, it would cost over RMB2m.

If poverty relief resources are allocated according to the law, this would surely be more effective than having them allocated by cadres. If the resources go to the communities and are used by the local people in charge, then we could do many things with very little money. Because what the Chinese countryside does have is extra labor.

People in power believe in allocating resources through power. Rich people believe in letting the market allocate resources. Actually, in terms of poverty relief, power is not the most effective factor. This is easy to understand. The market is also not the most effective method. This point is not understood by many. In Chinese countryside there are 300m laborers everyday who play mahjong at home. Much work in the countryside goes undone. The market cannot effectively allocate this surplus labor. The greatest resource for resolving poverty in rural China is the rural labor force. The most effective method for allocating rural labor is to rely on the farmers' own organizations. Only grassroots organizations can combine the allocation of labor with other resources. Only in this way will the use of resources be most effective.

In our country, the result of allocating resources by power or by the market is that the majority of resources are allocated to strong social groups. A total of 80% of resources in the health care industry are allocated to towns at the county town level and above. Educational resources are mainly allocated to schools like Tsinghua and Peking University. Infrastructure facilities are mainly allocated to cities. In many places, poverty relief resources and public resource allocation have become a game of trading power for power or power for capital.

7) The education system and the medical system
These two systems are similar, so I will only talk about education. People seem to be of the consensus that education can change one's destiny. Can education in Central and West China change the destiny of the people there? I don't think so. It makes them poorer. I wrote about a high school student in my "Poverty relief diary." His parents borrowed a great deal of money to get him into high school. After he graduated from high school, he went to work in the city, and made RMB400 a month. It will take over ten years to repay his debt for his education. He says when he pays back his loan, he will try to save RMB2000, then he will return to his mountain village and get married. He will not return to the city to work. By that time, he will be over 40 and even if he didn't want to go home, there would be no job for him in the city anymore. What does current rural education consist of? Poor parents borrow money and pay exorbitant education costs to produce one high school graduate. What does this student give back to his parents? Nothing! He gives the best years of his life, from 20 to 40, to the city. Wheat does he get back? Nothing! By the time he is 40, on the cusp of getting old, the city and developed areas don't want him any more. His old age is cast like a burden back to Central and West China, to the poor people. Is education like a pump? Education continuously pumps resources from Central and Western China to developed areas and "pumps" resources from the poor to the rich!

When I was in primary school, one year's tuition was under one yuan. When I was in junior high, a year's tuition was 2 yuan. When I was in high school 3 to 5 yuan was sufficient for one year. When I was in college, the state provided a subsidy of over RMB20 per month plus grain coupons for 35kg of grain. What about my child today? It's over RMB100 for primary school and over RMB1,000 for high school. Senior high schools are raising the acceptable scores for entrance exams to a sky-high level. If you are one point below, you must pay one hundred or several hundred yuan to get in. Now college students get little or no money from the state. More often than not the schools charge a lot. I did some calculations, from 1985 to now, the prices of agricultural produce rose less than 7 fold. Take rice as an example, in the past rice was RMB0.4 to RMB0.5 a kilo, now its about seven-times that. Farmers income (in terms of prices) have grown 7-times. But education for farmers now costs several hundred times or even several thousand times more than before. How can farmers not be poor! When farmers make a little money, it is drawn away completely by education. Farmers must borrow money to educate their children! And they are educating their children for the benefit of developed areas, just as Tsinghua University and Peking University are training people for America!

The medical system is the same as the education system, if not worse! I won't even go into it here.

8) The employment system
For a long time, when the government has talked about employment and unemployment, they have only been talking about urban residents. Farmers are not included. Today, the Labor Law still only protects urban workers, and social security for unemployment has nothing to do with migrant laborers. In cities like Beijing and Shanghai there is still serious prejudice in employment.

When's more serious is when fiscal and tax resources are allocated to solve employment problems, farmers are not given any consideration at all. In other words, the unemployment project has nothing to do with farmers.

State banking resources favor solving employment problems for urban residents and state-owned enterprise employees. Every year several dozens of billions of yuan in loans are given to state-owned enterprises. More resources from the securities market are also given to state-owned enterprises, whose main purpose is to guarantee employment. Who gives farmers such a nice policy?

Is there no way to solve farmers' employment problem? No. The state has had ample opportunities to provide employment for farmers. For instance, after the flood of 1998, the state dished out several dozens of billions of yuan for the repair of dams and river beds. At the Yangtze River dam, every cubic meter of earth was paid for at RMB12. This good business opportunity was given over to big capitalists. They contracted the work to contractors in the countryside for RMB3.6 per cubic meter. They made a profit of over RMB8 per cubic meter for doing nothing. If the state considered the project from the farmers' point of view, several dozen billion yuan could solve the employment problem for many, many farmers and generate several dozens of billions of yuan in income for farmers. Another example is the many water conservation projects in the countryside waiting to be built. Some are to restore projects to their original functions. If the state can not pay for the projects right away, could we allow the farmers to work on them first, and pay them in coupons, with which could use for educational or medical services, or as guarantees for bank loans?

Mainstream society, when faced with the unemployment of farmers, always criticizes the farmers as having no education, lacking in personal development, not being accustomed to urban life, not being accustomed to a market economy. All this language is biased. The fundamental problem is that we have not considered the farmers' employment issue as a "basic right of a citizen," and have not considered creating jobs for farmers as a basic function of the government.

What does the countryside have a lot of? Labor. Everyday there are hundreds of millions of farmers with nothing to do, while the money-making jobs are all given to rich people. How can farmers not be poor?

9) The salary system
The salary system is the biggest "pump". Salaries for urban workers cover marriage, children bearing, support for elderly parents, continued education and pensions. What about farmers' salaries? Do they cover these? No. A migrant laborer makes only around RMB500 a month. Migrant laborers can not afford to have children, they cannot support their elderly parents, and they can not solve their own pension problems. If a laborer can no afford to have children, this is crueler than the primitive capitalist accumulation discussed by Marx.

According to Mr. Lu Xueyi and Guo Shutian, the value created by every migrant laborer in cities on average is RMB25,000. Their average salary is only RMB6,000 to RMB8,000 (and this is a high estimate). So cities and developed regions obtain over RMB16,000 in surplus value from each migrant laborer per year. If 100m farmers enter cities, over RMB160b in value is taken from them.

The salary system is seriously inhumane towards migrant laborers and will lead to a series of very serious consequences.

According to statistics, China currently has over 10m farmers and migrant laborers who are unable to marry. Country girls all marry men from towns. They do not want a husband from the countryside who cannot afford to raise their children and support their parents. Some girls would rather become the concubine of a rich man than marry a peasant. Sociologist Fan Ping says the loss of "beauties" from the countryside will lead to "desertification" of rural society. Do we want urbanization to be paid for at the cost of "desertification" of rural society? There will surely be retribution for this!

10) The land system

The land system is probably the second largest "pump". According to the Constitution, rural land is collectively owned. Ownership is as clear as a bell. But farmers' land can not enter into the market. It can only be conscripted by the state, and then sold by the state. The state conscripts one mu of land for several thousand yuan or several tens of thousands of yuan, and turns around and sells it for several hundred thousand or several million yuan. Can farmers build factories on their own land? No. They must first let the state conscript the land and buy it back. Can farmers dig a fish pond on their own land? No. If they want to dig, they must pay the state first. The State, oh the state! Farmers account for 70% of our country. How come they don't represent the state? According to statistics, the "state" takes away several dozens of billions of yuan from farmers' land every year or even more.

This is not all. The state came out with the "Rural Land Contract Law" on March 1, 2003. This law stipulates that land contracts will not change for 30 to 50 years. People with more land are able to enter cities. Many people who enter cities became "landlords" and started to collect rent. People with little land have no power to go to cities and can only farm for "landlords." Land in Guizhou was distributed in the early 80s, and has not been adjusted since. After 20 years, the way land is occupied has became seriously out of balance. Many landless people are renting land from urban residents (who early on became government cadres), and pay 150kg of grain in rent per year plus agricultural taxes. How can farmers not be poor!

The land is collectively owned. So if someone leaves the collective, his/her land must be returned to the collective. However, the collective has no right to take back, distribute, or even adjust land. It can only observe helplessly while members of the collective are exploited by "new landlords," and becoming poor! This is a revolution is the making!

11) The system of government officials
Farmers have no right to become cadres. Farmers cannot take part in the civil servant examination. But what I want to say is another issue: the official system is also a "pump". Officials are appointed by their superiors. So if you want to become an official, you have to go and seek out these superiors. If you want to become an official, you must bribe these superiors. Otherwise things will be difficult! Thus every year a lot of money is spent on bribing officials. Where does this money come from? Of course this is "gray" income. When an official appointment comes at such a high cost, what are officials to do? They use their power before it expires. They use their power to get their money back from the people. The more officials are appointed, the more frequently officials are changed, the heavier the burden on the people. If officials are elected by the people, and the power to announce an official appointment lies in the People's Congress, then officials will have to bribe the common people by serving them well. If that were the case it would be nice.

Today we have a democracy as well, and officials are supposedly elected. But who comes up with the candidates? Superiors. So if you want to become an official, you still have to bribe these superiors. The democracy we have now is one in which the higher levels of government want a "people's election," namely using the hands of the people to "elect" people that the superiors want. The result is the same, but more costly. What ordinary people want is democracy from the bottom up. They want democracy to oust officials who do not serve the people. If these people are not ousted, how can good people get elected? If good people are not elected, how can farmers not be poor?

12) The legal system
Since reform and opening up, many laws have been created. The legal system is also a "pump". Now we rule the country by law, but more and more people go and complain to the central government in Beijing each year. What does this tell us? The laws are not working! Which laws are not working? A farmer has just several hundred yuan in disposable income per year. How can he afford to go to court? How can he afford to hire lawyers and judges? Poor people can't afford the luxury of the law. When the poor can't afford the law, then the law becomes a tool of the rich or powerful for bullying the poor. And there is no other form of aid besides going to court, so most of the time the poor just suffer in silence. If they really can't take it any more, poor people will go to the Forbidden City.

Many people do believe in the law, but court cases can ruin them. Without a sufficient amount of money, even if you are in the right you are not able to win. Therefore many people go to extremes and turn from a government supporter to a law breaker. Did they ask to be like this?! Some people laugh at farmers who believe in Judge Dee. They laugh at people who "settle out of court" and they laugh at "law illiterates." If you were poor, you would understand.

We have been saying that we are ruling the country by law for many years now, but more and more farmers are breaking the law. One farmer came from Sichuan to work in Beijing with only 500 yuan in his pocket. By the time he got to Beijing and paid for his train ticket, he had 200 yuan left. He needed lot of money to obtain a temporary residence permit, a health permit, and what-ever other permits, and he did not know where to get them. So in order to survive, he goes without them. If he goes without them, he has broken the law. How can he not break the law?! Poor people have to break the law in order to lower the cost of survival. Did they do anything to deserve this?!

Grassroots organizations and the government cannot survive without breaking the law, because fiscal policy only gives them 60% of their budgetary funding, and they are expected to rely on generating their own funds for the other 40%. Take the director of a police sub-station as an example. His responsibility is to punish criminals and protect the people. He must be given money to carry out his duty. But the government fiscal plan gives him only 60% of the funding needed to run his sub-station, and no money for handling cases at all. Furthermore, the sub-station must give RMB80,000 to the Public Security Bureau every year. So where will the sub-station get money from? Of course they must use their power to get money from the people. Doesn't this turn them into law breakers too? This is what I call "law enforcement supported by law violation." Sub-stations are like this. Grassroots courts are also like this. They first "fee off" the plaintiff; then they "feed off" the defendant. Basically all grassroots departments are like this.

Who wants to go from being the director of a sub-station to being a hooligan? But he must. If he doesn't become a hooligan, he can not serve as director. So, law enforcement people don't deserve what they get either!

I have said in the past that there are two development trends in rural China that we should be concerned about. One trend is the trend of grassroots people having to break the law in order to lower their cost of survival. This has become more and more obvious. The other is the trend for grassroots government and organizations to enforce the law by violating the law. This is also becoming more and more obvious.

Some say China's legal system is become more perfected and that Chinese society is gradually approaching a society ruled by law. I only half believe this. The legal system serving the minority is getting more perfected, and the "legal rule" of a minority of the people is gradually becoming "silently accepted" by society. The majority of society (especially the poor), however, are finding it more and more difficult to afford the cost of using the law to protect their own rights.

13）The system to popularize science and technology
The system to popularize science and technology is also a "pump". The countryside urgently needs science and technology services, there is no doubt about this. After four years of college and several years of graduate study, will students at the Agricultural University go back to the countryside to become technicians? Of course not! Because the small farmers' economy cannot afford to pay the returns students expect after obtaining a university degree at a high price. Technology is allocated by the market. The result is that university graduates in agricultural technology stay away from farmers and the agricultural economy. The number of technicians in the countryside is dropping. Does technology absolutely stay away from the countryside? No. For instance, hybrid seeds have gone to the countryside. In order to seek high returns, this technology has gone down to the countryside in a form of a special monopoly. So farmers must pay high prices for the use of this "technology". Therefore, the results of relying on the market to allocate technology are two, one is that technicians stay away from the countryside, and the other is that farmers must pay a high price for the use of technology.

In every reform of a township and town government organization, they say we must strengthen the administration of industry and commerce; we must strengthen taxation; we must strengthen fiscal departments; we must strengthen land administration. All departments that collect money from farmers must be strengthened. But all departments for technical services that farmers need, like agricultural technology promotion stations, fishery technology promotion stations, forestry technology promotion stations厎 all are pushed to the market to fend for themselves. The result of such a reform is that the network for promoting agricultural technology ends up a "broken net, with people gone, and technology evaporated." Farmers' rights to cheap technology services is taken away. This creates the possibility for technology to obtain monopoly profits. Such a reform can only make poor farmers even poorer.

Since the market can allocate technology very well, why bother sending technology to the countryside? Since market allocation of technology is harmful to the backward countryside, why push agricultural technology promotion departments to the market? Since reform there has been a rule: our system design is always carried out under the banner of "alleviating farmer's burdens," and always making things better for the powerful. The system to promote science and technology is merely one example of this.

14) The market entity system
Many people think reform and opening up happened earliest in the countryside. Farmers got their own land and started operating on their own. Therefore farmers must be a market entity. They have surely been given the status of a market entity. Reality is not so. Today farmers still haven't obtained complete status as a market entity.

If a farmer leaves his land fallow, he must not only pay taxes as before, but is fined on top of this. This is equal to using force to coerce farmers to work their land with low-cost or free labor to produce large quantities of cheap agricultural produce, in order to guarantee demand from urban residents. Do farmers have the status of a market entity? Obviously not. Our mainstream economists and government officials like to say that we should push all the farmers "to the market." On the one hand they do not give farmers the freedom to be a market entity, and on the other hand they want to push the farmers to the market. Why is this? It's very clear. They want to force 230m farm households to produce. After they produce, they push them to the market to form disorderly transitional competition. Can farmers get from this a social-average profit? Agriculture is in and of itself an industry of low returns. How can farmers not be poor?

Millions of small farm households can only deal with the exploitation of large capitalists and strengthen their own market entity status by organizing together. However, China allows people to form chambers of commerce, and many other associations, but it is extremely difficult for farmers to form their own organization. Thus for small farmers, already at a disadvantage in the market economy, how can they not be poor?!

15) The household registration system
The household registration system is also a "pump". Urban registration is worth a lot more money than rural registration. When I was in primary school, I already understood the superiority and "nobility" of urban residents. Classmates with urban registration are different from us farmers' kids in terms of food, clothing, homes, and toys. I was so envious of people with urban registration then. In 1985, I became township party secretary. Many farmers came to me for urban registration. This requires the joint efforts of many departments, including the grain department, public security, and civil administration, and finally the given county governor in charge must sign his name. Resolving one urban registration requires, apart from a lot of money, much time and energy. By the early 1990s, urban registration in a county town were being sold every year, some years for RMB100, RMB200, and some years for RMB500. Each fetched somewhere around RMB20,000 or RMB30,000. Some farmers would buy an urban registration for their children even if that meant taking out a loan. One also needed a "back door." At that time, many people sought me out as a "back door." People came crying to me for help. In some cities, one registration sold for thousands and thousands of yuan or even more. Even today, if you want a registration for Beijing and cities like that, you still must pay a high price. I worked for several years in Beijing but I can not become a Beijing resident, because I can't afford to buy this residence. Urban registration has sucked so much wealth out of the countryside, it is an abomination!

16) The tender system
Currently, any public facility in the countryside must go through a public tender, as if this means it will be a fair process. Maybe the tender system is actually good in other countries or developed places, but it is not very good in the underdeveloped countryside. It is a prejudicial system. It is a system that makes farmers' burdens even heavier, and must be changed. In an underdeveloped place, the market cannot form ample competition. Under such circumstances, a tender means an open, legal "gray transaction" between a few cadres and a few "brothers" they call in. In this game of tendering, there is neither full market competition, nor any democratic supervision. And 99% of the people are kept out. Such tenders only become a conspiracy between power and money. For something that can be done for RMB100,000, the budget is created for RMB500,000, and power and capital share the profit. Something that can be done by farmers' organizations or farmers' labor, is now done "according to the law" through a tender. This is actually the collusion of power and capital to reject poor people. Currently, the use of state funds in "six small construction projects" in the countryside, compared with the 1980s, it costs RMB1 now to do things that could be done for RMB0.1 in the 1980s. State poverty relief funds have been growing in recent years, but those getting out of poverty are fewer and fewer. A leader in charge of studying poverty relief policies said to me, the effect is less than 10% of the effect obtained before. The problem of inefficiency in using poverty relief resources should give us cause for reflection.

17) The supervisory system
Currently, more and more food items are not safe, more and more medicine is not safe, more and more lottery tickets are fake, more and more stocks are not secure, more and more insurance policies are not guaranteed, more and more banks are not trustworthy厎 more and more supervisory departments are not trustworthy. Faced with all these worries, what are people supposed to do? More and more people still proscribe the same solution: strengthen supervision.

When the Xi'an BMW fake lottery case appeared, people said we were merely missing supervision. Isn't the notary public a supervisory department? Isn't the Lottery Administrative Center a supervisory department? Isn't the Consumers' Association a supervisory department? Many people then said: the current problem is that someone is needed to supervise the supervisory departments. We need to place another supervisory department on top of all the supervisors. The People's Bank of China supervises banks, now we have the CBRC (China Banking Regulatory Commission). So I want to ask: what if the CBRC is corrupt, should we create another "CBRCRC"?

I want to declare that I am not against supervision. Of course we need supervision. But there are two points we must clarify: what kind of supervision do we have, who does the supervising; and secondly who will pay for this supervision, who benefits from paying the cost of supervision. We have an increasingly complex supervisory system, but we do not see any roles for people in there. It's always the people with the power to supervise the people with power, and the result is that they get together and do us ordinary people in. Supervision is a power, and power is in the hands of the few. But they always claim what they do is for the majority , and force the majority to pay for the cost of their own personal gain. The more supervisors we have, the more costs we pay. The more costs we pay, the more "supervisors" we support. And the more supervisors we support, the more the effectiveness of supervision becomes harder to guarantee. And the less effective the supervision becomes, the more "supervisors" we need. This "vicious cycle of supervision" make us pay over and over again, gives us hope over and over again, and hoodwinks us over and over again, and then make us pay over and over again厎.

It's not difficult to break this vicious cycle, we just need people's democratic supervision with the power in the hands of the people.

18) The system of delegates
A People's delegation conference is held in the county town. The delegate power of a dozen farmers is equal to the delegate power of one urban resident. When it comes to the National People's Congress this is even more so. Even in a township people's congresses, the majority of attendees are all cadres, hardly any are real farmers. Even if there are a few real farmers, they are nominated by cadres. Our political system thus determines that farmers, who compose the majority of the population, "have no voice."

This delegation system is the institutional root of poor people remaining poor!

Similar institutions that cause poverty also exist. I can't come up with a list of all such institutions here.

If these institutions are unbiased and fair towards both the poor and rich; towards urban residents and farmers; towards common people and officials; towards mainstream society and non-mainstream society, then I think farmers would not be so hard-up and the countryside would not be so poor!

Mainstream society's concept of many issues is established on the premises that they themselves are always right. This reminds me of students' understanding of farmers and the countryside. When the students were sent down to the countryside [trans.: during the Cultural Revolution] farmers gave them the best rooms, gave them white rice, while farmers themselves ate rice mixed with wild herbs. Who heard of students starving to death in the countryside? Nobody. But at that time, many farmers died of starvation. After some students returned to the cities, they talked about the suffering in the countryside and said they lost ten years of their youth there. At the time, nobody heard the problem in this statement. Actually the ones who said this may not have meant to be prejudiced against farmers. But the thought behind this statement is that generations of farmers are not even human, they are garbage! This is because mainstream society consciously or sub-consciously considers themselves to be human and farmers to be garbage. That's why we have these unequal institutions. The design of these unequal institutions is done either consciously or subconsciously. It is because of this, that mainstream society should reflect on this. Because they have this subconscious prejudice, they should seriously reflect upon this.

2. Structure and poverty

Institutional poverty leads to structural poverty

There are many dualities in our country. For instance, there is the duality of cities and the countryside, the duality of East China and West China; the duality of workers and farmers; the duality of officials and common people; the duality of labor and capital; the duality of poor and rich; the duality of mainstream and marginal; the duality of central fiscal affairs and regional fiscal affairs; the duality of the material economy and the virtual economy; the duality of upstream and downstream in industrial production teams. How did these dualities form? They are created by the irrational institutions discussed above. In all these dual opposites, one is strong, and the other weak. The strong obtains profit from the weak. Now polarization is being seriously enhanced. A very small number of people controls over 85% of the wealth of the entire society, and wealth is being further concentrated in the hands of a few.

When people who gain benefits in this dual opposition form a class, it is very hard for weak parties to get equal status. This forms a stable interest structure. Once this structure is formed, it becomes very difficult to break it; it becomes solidified. Currently, mainstream society stresses "stability is above everything else." What do they mean? This means stabilizing the status quo. Many people use this banner to protect the benefits they have gained. Today, when many corrupt officials are still in power, what they talk most about is "stability above all else."

Breaking a social structure requires the paying of huge costs and it is very difficult. Mostly, it involves destructive forces. But since reform and opening up, there has been a precedent whereby in the countryside, peaceful means have been used to break a structure. The family contract system dismantled the People's Commune system, which lead to the market economy replacing the planned economy, and structural changes throughout society. This is an amazing historical change.

Why was the family contract system able to dismantle the commune system? Because during the later stage of the commune system, after industrialization, tractors, chemical fertilizers, and other productive materials came to the countryside and needed to conduct trade with the countryside. The state wanted the commune to act as a channel to funnel more agricultural produce to cities. But the commune system fettered the enthusiasm of farmers, output of grain and agricultural produce was not able to grow. When urban and rural trade was conducted, urban residents lost money and the farmers lost money as well. At that time, under the commune system, both the interests of the urban residents and farmers suffered. Under these circumstances, family-based business operations made output of grain for every mu increase over 100kg. The state was satisfied and the collective was satisfied and farmers got the leftovers. The state did not suffer. Collectives did not suffer. Farmers did not suffer. Because of this, the state abolished people's communes which were binding the hands and feet of farmers. In reality, the right to produce freely, which the farmers gained, was paid for by the huge growth farmers created.

When farmers had a surplus, they wanted to invest it, they wanted to consume with it, and they wanted to establish township and town enterprises. And when township and town enterprises developed, farmers felt that the room for development in the countryside was too narrow. They needed to go to the cities. Thus over 100m farmers went to cities for work. This is all because family-based operation liberated productive forces. The growth created by farmers increased constantly. Their contribution to the state increased. Thus farmers continued to pay for more rights and continued to develop and bring about a series of changes. Therefore, the collapse of the people's commune system and the later series of changes were a "peaceful evolution" by Chinese farmers. The cost was huge, but still much smaller than a farmers' revolution.

China's future, between democracy and autocracy

Today, we want to change these various dual structures. Do farmers still have enough strength to create huge growth to buy back more rights? It seems very difficult. I see no hope and opportunities in the recent decade. Because of this, the irrational structure became solidified. What can we do? There are three ways of shattering it: one, the powerful party gives concessions; two, violence brings change; three, through democracy.

What road, method, and means can we adopt to change the current irrational duality structure? Can we expect the interest groups to give up something on their own? This seems unrealistic, and is not in keeping with the nature of power. If we go along the road of violence it will be a disaster. We should avoid that at all costs. The best means is by means of democracy. But this seems even less likely. I feel a growing force pushing China towards a greater concentration of power.

To clarify my worries towards a more autocratic future, let us remember the two stories I told at the beginning of this speech. There is one thing in common in these two stories: when resources (coal, electricity, natural gas, etc) in West China were "developed" by capitalists from East China very cheaply, in reality the resources from the West became capital for the east. When resources from the west continuously flow into large cities in East China cheaply, it further promotes the industrial development in East China and large cities; it absorbs more labor flowing from West to East. When natural resources and labor resources in West China are all very cheaply flowing east and towards large cities, how can industrial capital from the East go West? A potential problem we must face is to prevent the development of West China from turning into "colonization of West China."

Currently, mainstream society's consensus on solving the "three farming problems" [trans. "San Nong] is industrialization (naturally East China), urbanization, marketization, modernization and other "izations." To realize these "izations," the premise is to accelerate and enhance the unfair exchange between East China and West China, between cities and the countryside. This unfair transaction is not a fair exchange under a democratic political system, according to market rules. Rather it is an unfair set-up under an autocratic political system. This institutional set-up represents the interests of the powerful. It guarantees the rapid development of East China and the swelling of cities. I often think that before too many years, cities like Beijing, Shanghai, Guangzhou, and Shenzhen will become international metropolises with 10m or 20m people. And the gross economic output of capital cities and East China will occupy 90% of total national output. By that time, "stability" naturally will imply protecting the prosperity of large cities and East China. Will the result of "stability" be democratic? We will be forced to "stabilize" then, but will the result be democracy or autocracy?

When 60% to 70% of farmers at the bottom of society have no power, all our "izations," including urbanization, will only further marginalize farmers! When more and more people are marginalized, will there be democracy?!

What road should China take in the future?

Fellow students, let me quote a saying among officials: the problem we face now is a problem in the process of development. Many major issues I cannot think through clearly myself. I leave these problems to you, to university professors. Let us think about them together. We have the responsibility to find better roads, methods, means, to change the current situation of hardship, poverty and danger of farmers. Fortunately the new Party Central Committee has proposed a scientific view of development and has written this objective of benefiting the people on the banner of the party. This has opened a window of freedom for us in thinking about the future of China. I believe benefiting the people and a scientific view of development are a good weapon and a gold key for solving all the many new problems we face in development.

by reporter Li Changping