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UNCLAS SECTION 01 OF 03 GUANGZHOU 011468 
 
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E.O. 12958: N/A 
TAGS: EAGR PHUM SENV EIND SOCI PGOV CH
SUBJECT:  Disagreement on Building a New Socialist 
Countryside 
 
(U)  THIS DOCUMENT IS SENSITIVE BUT UNCLASSIFIED.  PLEASE 
PROTECT ACCORDINGLY.  NOT FOR RELEASE OUTSIDE U.S. 
GOVERNMENT CHANNELS.  NOT FOR INTERNET PUBLICATION. 
 
¶1. (U) Summary:  A substantial number of Chinese rural 
development experts at a major think tank conference 
believed that the rural-urban gap is a startling eight to 
one (when taking into consideration "public services") 
instead of three to one.  There was a virtual consensus 
among conference delegates the rural sector is dangerously 
underdeveloped and that public service improvement in areas 
like agricultural production, education and medical services 
is the key to building a "New Socialist Countryside."  The 
bigger challenge, however, remains with the questions of 
governance reform:  should the township government structure 
be eliminated and should farmers be granted more rights? 
Here there was no consensus but rather heated debate.  End 
Summary. 
 
¶2. (U) Recently Beijing Emboff and Guangzhou Congenoffs 
attended a two-day conference on rural governance issues in 
Haikou, in China's southernmost province of Hainan, 
sponsored by the China Institute for Reform and Development 
(CIRD) and the International Republican Institute (IRI) and 
enjoying German support.  The title of the conference was 
"Building up a New Countryside in China:  Rural Governance 
and Township Government Reform."  The conference featured 
speakers from the Chinese government (national, provincial, 
municipal and county levels), state-sponsored research 
councils, academics from Asia and America and foreign 
diplomats. 
 
Background on Rural Development Policies 
---------------------------------------- 
¶3.  (U) Since 1953, the agricultural sector has been 
exploited in favor of industry.  Today the Chinese Central 
Government is concerned with the social and economic gap 
between rural and urban areas stemming from this policy and 
the unequal economic growth since the 1978 reforms.  Since 
2000, the Central Government has dealt with the problem 
through such measures as making rural issues the "number 
one" Party document, eliminating agricultural taxes and 
mandating universal nine-year education in rural areas. 
More recently, in his March 5 report on the work of the 
government, Premier Wen Jiabao highlighted rural development 
as the central goal of the 11th Five-Year Plan.  The plan 
calls for an increase of 14 percent on rural area spending 
(equal to RMB 42 billion, or USD 5.25 billion), compared 
with last year. 
 
This Is a Public Service Announcement: "We Need Money!" 
--------------------------------------------- ---------- 
¶4.  (U) Essentially the presentations at the conferences 
dealt with three topics:  1) public service problems; 2) 
township government reform; and 3) farmers' representation 
and rights.  A fundamental question throughout all the 
lectures was "what is the source of the rural-urban gap?" 
Lecturers acknowledged that the rural-urban income gap is 
roughly three to one.  Thus overall agricultural production 
must increase.  However, beginning with the opening speech, 
many speakers considered deficiencies in "public service" 
areas (hospitals, schools, police, etc.) as the real 
contributor to rural poverty.  One speaker estimated that if 
these public services in cities were included in the urban- 
rural comparison, the rural-urban gap is more likely to be 
eight times to one.  For example, Guo Jianjun of the Rural 
Research Development Center reported that 86 percent of 
villages have no road access, 300 million have bad drinking 
water and 190 million live near environmental hazards.  In 
terms of education, urban residents study on average 8 years 
while rural areas only 6.7 years.  According to the 
speakers, the public services such as education, health, 
infrastructure and (according to some) population control 
are all important areas in need of further development. 
 
¶5.  (U) Some of the later speakers described China as a 
country with a "dual system" of citizens.  The rural areas 
are many generations behind urban areas and urbanites tend 
to regard people from rural areas as second class citizens. 
 
GUANGZHOU 00011468  002 OF 003 
 
 
One speaker described how in most traffic accident cases, 
urban victims get three times the compensation. 
 
¶6.  (U) The famous rural development scholar, Wen Tiejun, of 
Renmin University, was concerned about the "Latin 
Americanization" of China, i.e. the rise of urban slums. 
Wen defended China's development plan as a monumental task 
unparalleled in history.  He argued that any country with a 
rural labor force over 100 million will inevitably end up 
with urban slums.  His two main examples were India and 
Brazil.  China has a rural labor force of 500 million, 
larger than the 430 million found in all the developed 
countries combined.  Thus Wen concluded that urbanization 
will continue to challenge local governments' capacity to 
provide public services. 
 
Too Many Hands in "The Emperor's Rice"? 
--------------------------------------- 
¶7.  (U) One area of debate at the conference was whether the 
township governance system should be eliminated.  Some 
speakers complained that China's government structure 
suffers greatly from redundancy.  For example, no other 
country in the world has six levels of government (Note:  In 
China, these are: central government, province, prefecture, 
county, township, and village.  End note).  One Chinese 
researcher has estimated that government and party 
bureaucrats eat way more than their share of "the Emperor's 
rice."  Of the 800 million countryside denizens, bureaucrats 
constitute only 5.5 percent of the population, but consume 
42.7 percent of total village agricultural production. 
 
¶8.  (U) However, a minority of speakers, such as Mr. Xiao 
Jinchen of the National Development and Reform Commission, 
argued for maintaining township governance.  Xiao estimated 
that China has 2,800 townships and 720,000 villages.  Thus 
each township governs about 256 villages.  Mathematically 
the township is the most efficient level of government and 
without which, prefectures would be overburdened. 
 
The Village Voice:  Good or Bad? 
-------------------------------- 
¶9.  (U) The final issue of serious discussion was about 
farmer participation.  One village leader from Hubei 
province described the difficulties of working at the 
grassroots level.  He said that since the abolition of 
agricultural taxes, village leaders are not paid on time, if 
at all.  Many leaders are depressed, lose hope, and are 
forced to find "another living" (either another job or 
possibly corruption).  Describing the paucity of rural 
government funds, he said that "even the wisest wife can't 
cook without ingredients."  Moreover, village leaders have 
no real autonomy, as the township must approve all 
decisions.  This top-down approach means that village 
leaders cannot always provide what farmers really need. 
 
¶10.  (U) Wen Tiejun raised the point that rural denizens 
cannot be called "farmers" in China.  The term "farmer" 
denotes possession of property.  In China no rural citizens 
possess land property and thus it is more appropriate to 
call them "peasants".   A Zhejiang University legal expert 
later described the legal differences for rural and urban 
residents.  Urban residents are free to sell their property 
(i.e. the house or apartment, but not the land) to anyone, 
including foreigners.  Rural citizens can only "sell" land 
within the village, where "sell" truly means to swap the 
land.  Rural residents can rent the land to peasants from 
another village, only with a 2/3 majority agreement from the 
village collective. 
 
¶11.  (U) Some of the more ideologically-minded Communist 
Party cadres were unwilling to consider increasing farmers' 
autonomy or land rights.  For example, Xin Ming of the 
Central Party School's Research Office, was adamantly 
against the rise of farmer "interest groups".  He believed 
that the Party should decide the direction of rural 
development and that China "can't be persuaded by farmer's 
interests." 
 
In a Land Far, Far Away... 
 
GUANGZHOU 00011468  003 OF 003 
 
 
-------------------------- 
¶12.  (U) Although some of the lectures were useful, the 
context and audience reaction during the conference were 
perhaps more interesting.  The CIRD conferences are held in 
the isolation of Hainan, far from Beijing, and among a more 
international crowd, some Chinese officials were encouraged 
to be more critical of government policies than usual. 
Audience members were laughing about government corruption 
among local government Party leaders and the abysmal rural 
educational system.  Even the accompanying Guangzhou 
Consulate FSN found some of the comments unusually bold. 
During one of the question and answer sessions, a delegate 
asked about the inability to implement nine-year compulsory 
education.  He asked, "If the government itself doesn't 
follow the law, what should we do?"  The Ministry of 
Agriculture official flatly replied, "Reform!" 
 
COMMENT:  Keep the "New" Out of "New Socialist Countryside" 
--------------------------------------------- -------------- 
¶13.  (SBU) In general, a conference like this is more useful 
as a thermometer of China's domestic politics than as a 
source of new information.  For example, an April 7 New York 
Times article, "Chinese Analysts Clash over Reforms", 
demonstrates that in Beijing, Chinese intellectuals are 
facing an internal dilemma about the nature of Communist 
Party goals.  More progressive thinkers are tired of the 
redundant, top-down, corrupt model of Communist leadership 
in the countryside.  Instead they would like to grant rural 
citizens more rights and decision-making power.  Similarly, 
even in Hainan, thousands of miles from Beijing's watchful 
eye, old guard Communists remain unwilling to grant rights 
to local farmers, hoping that the "New Socialist 
Countryside" will be less "new" and more "socialist." 
 
¶14.  (U) This message has been cleared with Embassy 
Beijing. 
 
DONG