VZCZCXRO9624
PP RUEHCN RUEHGH RUEHVC
DE RUEHBJ #1116/01 0470333
ZNR UUUUU ZZH
P 160333Z FEB 07
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 4841
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUEHC/DEPT OF LABOR WASHDC
RHEHNSC/NSC WASHDC

UNCLAS SECTION 01 OF 02 BEIJING 001116 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
USDA/OSEC FOR DORR/BUCHANAN/TERPSTRA 
USDA/FAS FOR OA/YOST; OSTA/BRANT/HAMILTON; 
OCRA/ALEXANDER/RADLER/HIGGISTON/MIRELES, OFSO/LEE/SCHAYES/THURSLAND 
USDA FOR FAS/ITP SHEIKH 
TREASURY FOR OASIA/ISA CUSHMAN 
LABOR FOR ILAB 
USDOC FOR ITA/MAC/OCEA MCQUEEN 
 
E.O. 12958:  N/A 
TAGS: ECON EAGR ELAB EFIN PGOV SOCI CH
SUBJECT: URBAN-RURAL INCOME GAP NARROWING IN JIANGXI THANKS TO 
MIGRANT LABOR 
 
REF: (A) CHENGDU 36 
(B) 06 BEIJING 13274 
(C) BEIJING 1081 
 
SUMMARY 
------- 
 
¶1. (SBU) Remittances from rural-to-urban migrants have boosted rural 
incomes in Jiangxi Province, lowering the urban-rural income gap to 
below the national average.  Provincial and municipal level 
government officials believe agricultural sector modernization, 
including renewed emphasis on agro-processing, hybrid rice 
varieties, and developments in the fisheries and livestock sector 
potentially will benefit the rural economy, but they acknowledge 
that Jiangxi's villages still derive a far more significant benefit 
from migrants' remittances.  Jiangxi's rural residents continue to 
move in large numbers to coastal China in search of work, and 
officials estimated that non-farm income now accounts for 50 to 70 
percent of rural incomes in the province.  END SUMMARY. 
 
TRAVEL TO JIANGXI 
----------------- 
 
¶2. (SBU) Econoff and Econ Assistant traveled to Nanchang and 
Jiujiang in Jiangxi Province February 5-7.  Emboffs met with 
Provincial Government officials at Jiangxi's Development and Reform 
Commission, Agriculture Bureau, Foreign Affairs Office, Statistics 
Bureau, Rural Credit Cooperative, Poverty Alleviation Bureau, and 
Academy of Social Sciences on February 5-6.  In Jiujiang on February 
6-7, they met with Municipal officials from the Development and 
Reform Commission, Agriculture Bureau, Economic and Trade Committee, 
and Statistics Bureau.  They also visited a village in De An County 
in northern Jiangxi Province. 
 
URBAN-RURAL INCOME GAP SHRINKING 
-------------------------------- 
 
¶3. (SBU) Policymakers in Jiangxi Province aim to increase rural 
incomes and narrow the urban-rural income gap in one of China's 
poorest provinces.  An official at the Provincial Agriculture Bureau 
said on February 5 that Jiangi will increase its investment in 
rural areasin 2007, focusing specifically on improving thequality 
of its agricultural products.  Rural incomes rose by 9.8 percent to 
RMB 3,585 (approx. USD 450) in 2006, according to the Jiangxi 
Provincial Development Reform Commission (JDR), following 
significant gains to RMB 2,953 in 2004 and RMB 3,266 in 2005. 
Although a relatively poor province, Jiangxi's average rural income 
virtually matches the national average (RMB 3,587), and the 
urban-rural income gap stands at 2.78 to 1 after hitting a low of 
2.6 to 1 in 2005 (compared to a national average of 3.2 to 1). 
 
JIANGXI'S TWO FACES OF RURAL DEVELOPMENT 
---------------------------------------- 
 
¶4. (SBU) Nie Wenlong, Vice Director of the JDRC, said there are two 
main reasons for rural income gains.  First, government policy at 
all levels, including the Central Government's decision to eliminate 
the agricultural tax, has benefited rural residents.  A researcher 
at the Jiangxi Provincial Academy of Social Sciences (JASS) said 
that many of the province's rural residents live in isolated 
mountainous areas with limited arable land, and the government must 
therefore focus on making better use of the land, including 
promoting agro-processing for fruit and adopting modern planting and 
harvesting techniques for hybrid rice.  She added that the Central 
Government's 2007 Number One Document (see Ref C) provides a basis 
for encouraging these modest steps towards agricultural 
modernization, and provincial government officials also are seeking 
to further develop fisheries and the livestock industry in northern 
Jiangxi near Poyang Lake. 
 
¶5. (SBU) Second and more importantly, Nie reiterated what rural 
experts from many provinces, including Jiangxi, have stated 
previously, which is that despite agricultural gains, rural-to-urban 
migration has a far greater impact on the rural economy (see also 
Ref A on out-migration from Chongqing Municipality's countryside 
during 2006 and Ref B on the social impacts from Jiangxi's 
rural-to-urban migrant population).  At least 7 million of Jiangxi's 
 
BEIJING 00001116  002 OF 002 
 
 
32.9 million registered rural residents have left the province to 
seek work in other areas, primarily coastal provinces such as 
Guangdong and Fujian.  According to the Provincial Statistics 
Bureau, salaries from migrant labor now officially account for a 38 
percent share of rural income, up from 36 percent in 2005, and 
approximately 40 percent of rural labor is working in non-farm 
employment. 
 
MUNICIPALITIES ENCOURAGING FLOW TOWARDS WAGE LABOR 
--------------------------------------------- ----- 
 
¶6. (SBU) In Jiujiang Municipality on the banks of the Yangtze River 
in northern Jiangxi, approximately half of a rural labor force of 
1.7 million are employed in the non-farm sector, including 700,000 
who have moved to cities in search of work, according to an official 
at the Municipal Agriculture Bureau.  Of the average rural income of 
RMB 3,550 in 2006, the official said, approximately 50 to 55 percent 
is derived from non-farm income and 35 to 40 percent is from 
agriculture.  Policy subsidies and property income account for the 
remaining small percentage.  Recognizing the contribution of 
non-farm income to the rural economy, Jiujiang Municipality, like 
other provinces and municipalities, has taken advantage of a Central 
Government subsidy to offer work skills training to farmers who are 
interested in migrating to urban areas to work.  Jiujiang's 
Agriculture Bureau trained 20,000 farmers under this program in 2006 
and plans to train 30,000 in 2007. 
 
¶7. (SBU) According to JASS, the impact of remittances from 
rural-to-urban migrants on the rural economy is even more pronounced 
in the poorer southern part of the province.  A study in Ganzhou 
Municipality revealed that non-farm income contributes approximately 
70 percent of the municipality's average rural income of RMB 2,700. 
A JASS researcher said this income boost allows Ganzhou residents 
remaining in the countryside to secure adequate health care or 
purchase consumer goods such as telephones and televisions. 
 
NEW COUNTRYSIDE VILLAGE SHOWS BOTH SIDES OF THE COIN 
--------------------------------------------- ------- 
 
¶8. (SBU) In northern Jiangxi's De An County (located halfway between 
Nanchang and Jiujiang), the situation in Yuanjiashang Village 
illustrates the two-sided nature of the province's rural economy. 
Farmers in Yuanjiashang said they are pleased with recent production 
of rice, cotton, and oranges on their small plots of land, and they 
said the government has assisted the village to develop an improved 
sanitation system and to use methane gas instead of coal for 
cooking.  The village's average income is on par with the provincial 
average at RMB 3,500.  (Note:  In 2006, De An County designated 
twenty of its 2,000 villages as model villages under the Central 
Government's New Socialist Countryside policy.  The twenty villages, 
which cover approximately two percent of the rural population, 
receive funding from the provincial and municipal governments. 
Yuanjiashang, one of the model villages, is the home village of Yuan 
Longping, China's renowned hybrid rice researcher.  End Note.) 
 
¶9. (SBU) Despite government assistance to Yuanjiashang, however, the 
villagers still are heavily dependent on remittances from 
rural-to-urban migrants.  A village official estimated that half of 
the village's income is derived from migrants' remittances, and of 
Yuanjiashang's 48 households with 158 laborers, approximately 50 
people work in Guangdong, Fujian, or Shanghai. 
 
SEDNEY