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TAGS: PHUM PGOV SOCI EAGR EINV CH
SUBJECT: From Rural to Urban, Part 2: Qingyuan Villages Tap 
into Cities for Wealth 
 
REFERENCE: A) Guangzhou 21192; B) Guangzhou 11684; C) 
 
Guangzhou 2194; D) 05 Guangzhou 31940 
 
(U) This document is sensitive but unclassified.  Please 
protect accordingly. 
 
¶1. (SBU) Summary: Qingyuan, Guangdong province's largest and 
fastest-growing prefecture, is riding a wave of 
industrialization that has brought rising incomes to its 
rural communities.  Villages that used to live off their 
crops and government subsidies now rely on family members 
who work in cities and on the sale of their farmland for 
industrial development.  Farming is no longer profitable and 
agricultural subsidies are largely nonexistent.  Land prices 
are a source of great frustration for villagers, with many 
believing that the prices they get are too low and that 
corrupt local officials skim profits.  Although Qingyuan's 
rural residents are doing fairly well because of urban 
employment, officials are likely concerned about their 
increasing dependency on urban jobs, goods, and services. 
And with the direct and indirect urbanization of Qingyuan's 
countryside comes the heightened expectations of an 
increasingly sophisticated rural population.  End summary. 
 
¶2. (U) Econoff and EconPolAsst recently visited Qingyuan 
prefecture, a predominantly rural area stretching from 
central to north Guangdong Province and lying outside of the 
Pearl River Delta (PRD).  The southern reaches of Qingyuan, 
home to the majority of the population and industry, are 
only two hours from Guangzhou by bus.  Qingcheng City, home 
to half a million people and located in southern Qingyuan, 
served as our base as we visited nearby factories and more 
distant villages.  Reftel A explores the nature of 
Qingyuan's rapid industrialization and its long-term impact. 
This cable discusses the concerns of the rural population as 
they face this incoming tide of industry and urbanization. 
 
What Do You Mean by "Rural"? 
---------------------------- 
 
¶3. (U) The distinction between rural and urban in Qingyuan 
is becoming increasingly ambiguous.  Residents of villages 
in Qingyuan's countryside no longer consider farming their 
primary source of income, but rather depend on money earned 
by family members working in cities.  In some cases, only 
the young or old live in these villages, with the middle 
generation working outside.  Indeed, the first two farmers 
we spoke with had recently returned to their villages to 
farm after having worked as laborers in the Guangzhou area 
until they became too old to be employable.  Villagers often 
told us that once a child completes middle school 
(chuzhong), at around the age of 16, they leave to find work 
in a city.  In several villages that we visited, almost 
every family had a member working in a construction or 
factory job in Qingyuan or further afar in the PRD. 
 
¶4. (U) Given the fact that much of Qingyuan's rural income 
now comes from the cities, official statistics can be 
misleading.  The official per capita disposable income of 
Guangdong's rural residents grew 7.4% in 2005, to RMB 4,691 
(USD 573).  This is up 28% since 2000.  (The urban per 
capita disposable income grew 8.4% in 2005 to RMB 14,770 
[USD 1,804] -- up 51% over 2000.)  It seems likely that much 
of this increase in rural income comes not from farming but 
rather from money derived from urban or semi-urban jobs. 
Indeed, many villagers described meager earnings from 
farming (see below). 
 
¶5. (U) In addition to the heavy reliance of rural 
communities on urban employment, some of these villages are 
no longer what could be considered rural, having been 
swallowed by expanding cities.  The edges of Qingyuan's 
cities are dotted with these once-rural villages -- small 
clusters of brick houses now surrounded by industrial parks 
and factories.  These villages typically sell all of their 
farmland to the township government, which sells it to 
developers.  The village holds on to an area just large 
enough for the residents' homes -- the building of which is 
largely financed with earnings from the land sales. 
 
 
GUANGZHOU 00021212  002 OF 004 
 
 
Farming and Subsidies: Dwindling Sources of Income 
--------------------------------------------- ----- 
 
¶6. (U) Farmers in Qingyuan have turned to urban jobs in part 
because farming no longer generates a sufficient income for 
their families and agricultural subsidies are less generous 
than before.  If it were not for the influx of these 
industrial jobs, Qingyuan's rural population would no doubt 
be forced to send its family members farther away in search 
of income.  Several farmers told us they literally lose 
money by farming: the cost of plowing (with rented 
machinery), harvesting (with hired labor), fertilizer, 
pesticide, and seed exceeds the amount they receive after 
sales.  Even in a village surrounded by healthy orange 
trees, farmers said they do not earn enough money to live on 
and depend mainly on outside income.  It was no surprise, 
then, that we occasionally saw untended, overgrown fields. 
 
¶7. (U) Agricultural subsidies are no longer a significant 
part of the income for Qingyuan's rural families.  The 
majority of farmers claimed they receive no subsidies 
whatsoever.  In some cases, farmers receive a subsidy for 
growing rice of RMB 7 (USD 0.88) for each mu (0.16 acres). 
In one mountain farm, where the sole crop is bamboo, an 
older woman said the village was part of an agricultural 
collective until the 1970s and received subsidies in the 
form of grains.  Now the subsidies are gone and they rely on 
harvested bamboo -- which sells for RMB 1.2 (USD 0.15) per 
piece and brings each family only a few thousand RMB (less 
than USD 500) per year -- and outside jobs. 
 
¶8. (U) The elimination of China's agricultural tax in 2004 
has helped Qingyuan's farmers, but it was only a small part 
of their overall expenses.  On the other side of the 
equation, local governments are now without an important 
source of revenue.  In some cases, they have responded with 
creative accounting: residents in one Qingyuan village said 
their township government imposed a RMB 10 (USD 1.25) 
monthly "fee" on every person in the village soon after the 
agricultural tax was eliminated.  Villagers were more 
pleased with a recent reduction in school fees from 
approximately RMB 200 (USD 25) to RMB 50 (USD 6.26) per 
student per semester.  For families with two children -- and 
many of the rural families do take advantage of their 
exemption from the one-child policy -- the school fees were 
a significant burden. 
 
Public Utilities: A Mixed Blessing 
---------------------------------- 
 
¶9. (U) Many rural communities in Qingyuan have access to 
public utilities such as electricity and are becoming 
reliant on goods such as gasoline and propane.  Though 
villages benefit greatly from these goods, they are forced 
to maintain a higher level of income and are also vulnerable 
to shifts in prices.  All of the villages in Qingyuan's 
countryside that were accessible by road had electricity, 
and some of the residences in these villages had motorcycles 
and basic appliances such as televisions and rice cookers. 
Most villages, unless they were located close to cities, 
relied on water wells.  In one interesting case, a village 
near Qingcheng city told us that the city provides them with 
access to its water supply.  In return, however, the city 
has been dumping sewage into the village's ponds. 
 
¶10. (U) Prices for public utilities in Guangdong have been 
rising during the last year, including a recent hike in the 
cost of electricity.  The government, under pressure from 
refineries, has lifted price controls on gasoline.  With 
income that falls well below that of their urban 
counterparts, villagers are hit particularly hard by these 
increases.  In mountain villages, where less land is arable 
and they do not farm their own food, the cost of staples 
such as rice and vegetables are a heavy burden.  For those 
villagers that have sought employment in the cities and are 
sending money home, rising rents and public utility costs in 
the cities are serious hardships. 
 
Land Sales: Source of Hope and Frustration 
------------------------------------------ 
 
GUANGZHOU 00021212  003 OF 004 
 
 
 
¶11. (U) Though agriculture may no longer be profitable for 
many villages, their land has become an important source of 
wealth.  It was rare that we met a villager who did not know 
how much his land was worth, or have an opinion about the 
price.  Land compensation has become a contentious issue in 
China, and China's leaders are concerned about its potential 
for unrest.  Guangdong was the site of several significant 
rural protests in late 2005 and early 2006, in part because 
of disputes over land compensation and usage (see reftels B, 
C, D).  Nevertheless, these incidents are typically 
isolated, based on grievances with local officials, and thus 
far there appears to be no sign of a large-scale, 
coordinated rural movement on land compensation issues. 
 
¶12. (U) Negotiations over land prices are largely conducted 
behind closed doors, with the township governments 
apparently setting the price.  We met a number of farmers 
who criticized their village leaders for selling land at a 
price that was too low and not consulting with village 
residents first.  Some villages appear to be more 
transparent than others, holding meetings to discuss sales 
terms and prices.  Regardless, a village's approval of a 
land price is largely a formality.  Indeed, one village 
leader told us the township government sets the price and 
his job is to convince the village residents to accept it. 
 
¶13. (U) The going rate for one mu (0.16 acres) of land in 
the flat agricultural areas in southern Qingyuan is roughly 
RMB 22,000 (USD 2,752).  After the township government buys 
the land from the village, it turns around and sells it to a 
developer.  It is not clear what prices Qingyuan townships 
are charging developers, but this transaction certainly 
opens the possibility of corruption.  The developer must 
then level the land and build roads, drainage, and power 
lines, before selling it to an investor.  In one industrial 
park outside of Qingcheng, companies could buy land for 
approximately RMB 70,000-80,000 (USD 8,757-10,008) per mu. 
Thus the developer earns approximately RMB 50,000 (USD 
6,255) per mu in the transaction, minus the costs of 
preparing the site.  Villagers are understandably suspicious 
of collusion between local governments and developers in 
these deals.  However, villagers are not without their own 
schemes: villagers who have moved to cities will sometimes 
bribe local officials to change their household registration 
(hukou) back to the village in order to receive the land 
compensation. 
 
¶14. (U) Despite resentment over prices and corruption, 
villagers generally see land sales as an excellent way to 
finance their ultimate goal: a new house.  The cost of a 
house in Qingyuan is approximately RMB 40,000 (USD 5,000). 
By selling their land, a family can in some cases collect 
half that amount overnight.  In addition, the factories that 
sprout up on the land provide new jobs.  Despite these 
benefits, not all villagers are eager to give up their land, 
which not only has sentimental value but is a safety net in 
difficult years.  As a result, some villages have opted to 
lease all or part of their land, instead of selling it 
outright. 
 
Blaming the Government 
---------------------- 
 
¶15. (U) Qingyuan villagers generally have a skeptical view 
of government, particularly local officials.  Some said that 
even village leaders, who are elected democratically, cannot 
be counted on to serve the village interest.  According to 
one man, "the position corrupts whoever takes it."  The 
central government was rarely the target of criticism, 
however.  Indeed, one man said that the central government 
is on the right track, but the local officials are making a 
mess of things.  Another commented that Chinese officials 
obtain promotions by bribery and personal connections, 
whereas in America a citizen can rise to governor on merit 
alone.  (Interestingly, he was not aware that Econoff was 
from the United States when he said this).  Villagers also 
said that officials during the era of Mao Zedong were more 
concerned about the well-being of farmers than officials 
today.  Nevertheless, whenever we asked whether they would 
 
GUANGZHOU 00021212  004 OF 004 
 
 
prefer to go back to life in the 1950s and 1960s, the answer 
was always no. 
 
¶16. (U) Only some of the farmers had heard of the "New 
Socialist Countryside" campaign, which was launched by the 
central government in 2006 to improve infrastructure and 
social services in rural areas.  Among those who had heard 
of the term, none said they have seen any initiatives 
associated with it. 
 
Comment: The Goal Posts Have Shifted 
------------------------------------ 
 
¶17. (SBU) Qingyuan's rural villages are fortunate because 
the prefecture's industrial boom has brought jobs close by, 
and -- at least in the case of villages in the south where 
much of the development is taking place -- created a real- 
estate market for their land.  Guangdong's leaders are 
fortunate that these factory and construction jobs have come 
at a time when agricultural prices and subsidies are 
falling.  If Qingyuan's factories depart for cheaper 
locales, however, many of Qingyuan's villagers -- without 
jobs and without their farmland -- will be forced to join 
China's vast migrant worker population and look further 
afield for work. 
 
¶18. (SBU) The source of discontent in rural Qingyuan is no 
longer the hardship of poverty, but rather land prices and 
the corruption of local officials.  Recent village protests 
in Guangdong over land compensation came about because of a 
lack of transparency in decisions determining compensation 
and land usage.  Nevertheless, such protests have thus far 
been isolated incidents, and show no sign of a linked, 
coordinated movement. 
 
¶19. (SBU) In addition, because villagers are more aware than 
ever of how their urban counterparts are living, their 
expectations have risen accordingly.  Their increasing 
reliance on the trappings of city life, including public 
utilities and automobiles, make them vulnerable to rising 
prices.  As a result, officials are no doubt aware that 
urban policy no longer stops at the city edge, but ripples 
throughout China's vast countryside as well. 
 
¶20. (SBU) One important key to success -- a university 
education -- is still out of the question for the vast 
majority of rural children because of the cost.  Only once 
did we hear of a village child going to university, and he 
came back after one week because it was too expensive. 
Nevertheless, Qingyuan's rural residents seem determined to 
break that barrier as well.  One 13-year old girl from a 
village in rural Qingyuan told us that she was intent on 
studying software at university -- her uncle told her that 
is where the money is. 
 
MARTIN