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UNCLAS SECTION 01 OF 04 GUANGZHOU 010741 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EB, R, G, EAP/CM, EAP/PD, DRL, ECA 
STATE PASS USTR 
USDOC FOR 4420/ITA/MAC/MCQUEEN, CELICO, DAS LEVINE 
USPACOM FOR FPA 
 
E.O. 12958: N/A 
TAGS: SOCI PGOV PHUM ECON EINV PINR CH
SUBJECT: THE GAP BETWEEN RICH AND POOR IN SHENZHEN 
 
(U) THIS DOCUMENT IS SENSITIVE BUT UNCLASSIFIED.  PLEASE 
PROTECT ACCORDINGLY.  NOT FOR RELEASE OUTSIDE U.S. 
GOVERNMENT CHANNELS.  NOT FOR INTERNET PUBLICATION 
 
¶1. (SBU) Summary:  Much attention is being given to China's 
growing rural-urban gap.  At the same time, the gap within 
urban areas, between established residents and migrants from 
rural areas, is becoming more marked.  Shenzhen, as China's 
richest city, enjoys unparalleled prosperity, yet at the 
same time it has more migrants than officially registered 
citizens.  These migrants face serious challenges, most 
notably widespread wage defaulting on the part of employers. 
In addition, although Shenzhen allows some migrants workers 
to register as "temporary" residents, thus granting them 
access to social services, more than a million of its 
workers are still completely unregistered -- and 
disenfranchised.  As new workers arrive in Shenzhen (and 
other Chinese cities) every day, more of them fall under 
this category, increasing the potential for urban unrest. 
End summary. 
 
¶2. (SBU) With its recently announced plans to create the New 
Socialist Countryside, China's central government clearly 
signaled that it is paying close attention to the growing 
gap between the country's urban and rural areas.  China's 
breakneck economic growth since the beginning of the reform 
and opening period in 1978 has been due largely to the build- 
up of the country's manufacturing sector, often at the 
expense of its agriculture.  The idea was that eventually 
the riches would trickle down.  However, the point is fast 
approaching where the delicate balance between promoting the 
country's overall growth and continuing to place rural areas 
in the backburner becomes untenable, a fact that has not 
escaped the Chinese leadership. 
 
¶3. (SBU) One does not have to leave the confines of a large 
Chinese city to see the gap in action.  As more and more 
migrants from rural areas file into the cities to take low- 
paying jobs and escape the poverty of the countryside, the 
gap is beginning to replicate itself in the cities, with the 
breach between prosperous urbanites and disenfranchised 
`waidiren' ('outsiders') becoming more marked by the day. 
Some even suggest that real flashpoints of unrest in the 
future will not be the villages, which are relatively small 
and isolated, but the slums that are emerging as more 
migrants arrive in the cities, finding a reduced number of 
opportunities, and ultimately forming into an underclass. 
 
A city of immigrants 
-------------------- 
 
¶4. (SBU) In exploring these issues in South China, Shenzhen 
is a good place to start because it, more than any other 
Chinese city, is truly a city of immigrants.  Although the 
city lies right between the two largest Cantonese-speaking 
cities in the world, in Shenzhen Mandarin is the lingua 
franca for its population drawn from all parts of China. 
According to Cai Huanxing, of the Shenzhen Labor and Social 
Security Bureau, Shenzhen's permanent population of 8.2775 
million includes 4.7 million registered migrant workers. 
These 4.7 million migrants are considered "temporary 
residents;" the rest of the permanent population holds a 
Shenzhen `hukou' (household registration).  Additionally, 
there are scores of unregistered migrant workers, whose 
numbers probably exceed one million.  With a history that 
spans just over 25 years, Shenzhen can count few true 
natives.  It is therefore safe to assume that most of its 
permanent population is originally from elsewhere.  Of 
course, the experience of urban transplants from Beijing and 
other major cities has little in common with that of 
migrants from the impoverished countryside and inland 
provinces. 
 
The lay of the land:  From Eco-Square to Longgan 
--------------------------------------------- ---- 
 
¶5. (SBU) Deng Xiaoping, Shenzhen's intellectual father, 
would be proud of the scene at Shenzhen's Ecological Square. 
Here, in the heart of a prosperous neighborhood, a true 
Chinese middle class is at play.  The impact of China's 
 
GUANGZHOU 00010741  002 OF 004 
 
 
opening-up, spearheaded by the creation of special economic 
zones (SEZ) in southern China (of which Shenzhen was the 
first) has few expressions more tangible than these merry, 
urbane folks walking their dogs and choreographing dance 
routines in a public space that is, literally, an ode to 
sustainable development.  It is the success of people like 
these that have made Shenzhen the richest city in China, 
with the highest per capita income of the nation. 
 
¶6. (SBU) Meanwhile, one does not have to leave Shenzhen's 
municipal limits to find the Pearl River Delta of dusty 
streets and decrepit buildings amidst which factories 
staffed by young men and women from the Chinese hinterlands 
toil away to churn out the goods that are cheaper to make in 
China, largely because these young laborers are abundant, 
and thus cheap.  In between these two extremes, every 
restaurant, hotel and sauna in the city provides a perch 
from which young `waidiren' can take a peek, as outsiders, 
at the other China, the one they were looking for when they 
left their hometowns.  At that time, many, if not most of 
them, brimmed with excitement at the prospect of life in the 
South's gleaming metropolis. 
 
Rude awakenings 
--------------- 
 
¶7. (SBU) However, a new life in the big city is not 
necessarily a bed of roses.  Working conditions in the 
Delta's factories can be rough, with stories heard of forced 
overtime, lockups, and even beatings.  Usually lacking a 
`hukou,' these migrants in effect become second-class 
citizens, with reduced or no access to social services. 
Their illegitimate status also makes them easy prey for 
unscrupulous bosses who pay them less than "legal" workers. 
 
Wage defaulting 
--------------- 
 
¶8. (SBU) The most prevalent and serious problem faced by 
Shenzhen's migrants is the wage defaulting by their 
employers.  According to the China Daily, in 2005, some 
1,300 Shenzhen companies were fined a total of USD 5.87 
million for defaulting on wages, while workers recovered USD 
35.8 million in withheld wages during the same period. 
During the lead-up to the Chinese New Year, the violation of 
workers' right almost becomes institutionalized, as many 
employers withhold wages in an attempt to force workers to 
come back after their trips home for the celebration. 
 
¶9. (SBU) When wages are withheld, the Shenzhen authorities 
are ready to take "serious, effective measures" to help the 
workers get their money back, according to Cai.  In fact, 
earlier this year, eight Shenzhen executives became the 
first defaulters to be criminally prosecuted in China.  A 
recent edition of the Labor and Social Security Bureau's 
magazine featured an article on this prosecution, complete 
with pictures of the accused being presented to the public, 
handcuffed and wearing black hoods, and flanked by police. 
The initial thought that the hoods were provided to protect 
the suspects' anonymity was dispelled when it was noticed 
that their names were displayed on their standard-issue 
prison sweatshirts. 
 
A need to placate the masses? 
----------------------------- 
 
¶10. (SBU) A move towards a more heavy-handed approach serves 
more than just the pursuit of justice.  As the gulf between 
rich and poor grows in China's major cities, giving concrete 
examples of how everyone is in fact equal before the law is 
essential in preserving social stability.  In fact, the 
crackdown in Shenzhen came on the heels of much-publicized 
protests and work stoppages by unpaid laborers, and was 
perhaps aimed at placating the workers and discouraging 
others from following their example. 
 
¶11. (SBU) People's patience as they "wait for their turn" 
may quickly wear thin if they perceive that the authorities 
are, even indirectly, sanctioning their plight in order to 
allow the privileged to get richer.  In many locations in 
 
GUANGZHOU 00010741  003 OF 004 
 
 
the countryside, this turning point has been reached.  There 
the spark usually involves land, or more accurately 
inadequate compensation for it, aggravated by the corruption 
of local officials.  In the cities, where land is basically 
a non-issue, in addition to wages, another potential bone of 
contention is the issue of the `hukou.' 
 
`Hukou' save lives 
--------------------- 
 
¶12. (SBU) Although some estimates place 150-200 million 
Chinese living outside their official place of residence, 
without a `hukou,' a person may be unable to receive even 
basic public services in a given locality.  Even 
bureaucratic procedures such as securing a permit to visit 
Hong Kong or Macau can only be undertaken in one's city of 
`hukou.'  In effect, the `hukou'-less workers are 
undocumented aliens.  According to one Delta resident, the 
discrimination that the `hukou' issue creates is even 
directly responsible for the deaths of children that, unable 
to attend school for lack of a `hukou,' are left unattended 
by their migrant-worker parents, and then fall to tragedy. 
 
¶13. (SBU) Still, the issue of `hukou' reform is 
controversial, although there are a growing number of voices 
calling for it.  Policymakers and urban residents alike fear 
that such a liberalization of the rules would lead to an 
even larger, potentially upsetting influx of more `waidiren' 
to the cities.  The irony, of course, is that the large- 
scale, technically illegal migration that has occurred in 
China has been fundamental to China's, and the Delta's, 
remarkable economic growth in the past couple of decades, 
which has pumped disposable income into the pockets of, more 
than anyone else, city dwellers. 
 
Shenzhen's model 
---------------- 
 
¶14. (SBU) Shenzhen is one step ahead of the game in this 
regard.  Despite having a massive migrant-worker population, 
most of it does not face the `hukou' issues that are so 
contentious for millions of migrants across the country. 
Since 1984, Shenzhen allows migrants workers to register as 
"temporary residents," a status that, while short of full 
"citizenship," still allows them to enjoy public service 
benefits such as education for their children and access to 
health care.  Now, some 4.7 million migrants are considered 
"temporary residents" of Shenzhen.  In most other major 
Chinese cities, there is no similar "in-between," and 
workers that cannot become officially registered 
(predictably, not an easy task) are often terribly 
disenfranchised. 
 
¶15. (SBU) Still, not all of Shenzhen's migrant workers are 
registered.  It is estimated that at least a million 
migrants are not registered at all.  As the city continues 
to receive an influx of workers, which is expected, a larger 
percentage of the city's population may fall under this 
uncounted -- and disenfranchised -- category. 
 
Urban concerns 
-------------- 
 
¶16. (SBU) As the intra-urban gap grows, it is not just the 
migrants' dissatisfaction that could fuel problems.  The 
more-established city dwellers are sometimes, more than just 
aloof or self-centered, hostile to the `waidiren.'  As we 
mentioned above, many city dwellers oppose `hukou' reform, 
and this is partly because of concern about the strain that 
migrants place upon their cities.  For others, the migrants 
are not only a negative force in their city, but in fact the 
alleged cause for some of their city's worst problems (which 
ostensibly did not exist in the past or were less of a 
problem).  Yuan Yunzu, an organizer at the Disabled Workers' 
Service Center and Sichuan native, frankly said that city 
residents are often "afraid" of the migrants.  One Guangzhou 
native expressed her view that migrants were "dirty" 
(`zang'), and that it was their bumpkin ways that made her 
city dirty and unsanitary.  Meanwhile, a Hong Kong 
businessman attributed the rise in crime in both Shenzhen 
 
GUANGZHOU 00010741  004 OF 004 
 
 
and Guangzhou to the increased presence of migrants, who 
prefer the easy way of making money. 
 
Comment: Keep your eye on the cities 
------------------------------------ 
 
¶17. (SBU) For many China-watchers, the villages in the 
countryside are the place to watch as the concerns over 
social stability in China continue.  Without detracting from 
that view, China's cities should not be discounted.  As a 
scholar noted recently, unrest in the villages is relatively 
easy to quell, because of their small populations and their 
isolation.  If something goes wrong in a major urban center, 
it could be a very different story. 
 
¶18. (SBU) Moreover, cities are a gathering place for 
migrants from all over the country, where they can exchange 
stories and relate their experiences.  Despite the large 
number of "incidents" in rural areas (even as reported by 
government authorities), the almost-negligible connection 
between these incidents is remarkable.  Part of this is due 
to the fact that, again, these villages are relatively 
isolated, making it hard for the villagers to see their 
plight as part of a larger trend.  Meanwhile, the cities can 
provide the perfect forum for that to occur. 
 
¶19. (SBU) With its relatively forward-thinking attitude 
towards migrants, Shenzhen may be reducing its chances of 
being a focus for unrest.  By allowing most of its migrants 
to register, it enfranchises them, and makes them less 
likely to be critically disenchanted.  At the same time, the 
city is the richest in China, and its outward signs of 
affluence may accentuate the gap between the haves and the 
have-nots.  Recently, the city government fast-tracked the 
residency permit for a beauty queen from the Northeast, so 
that she could represent Shenzhen in upcoming events.  The 
city leaders were probably motivated by civic pride, but for 
many `waidiren,' it was a slap in the face.  Likewise, the 
wealth and prosperity that so many in Shenzhen enjoy, and of 
which the city leaders are understandably proud, may in 
other quarters cause resentment and, although we hope not, 
anger. 
 
¶20. (SBU) What is clear, however, is that Shenzhen is a 
unique city, and its experiences may or may not apply across 
the board, even within the Pearl River Delta.  In the coming 
months, we plan to explore these issues in other cities in 
South China. 
 
DONG