VZCZCXRO3981
PP RUEHCN RUEHGH RUEHVC
DE RUEHBJ #3718/01 1550641
ZNR UUUUU ZZH
P 040641Z JUN 07
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 8555
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 003718 
 
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: MIGRANTS FUEL SHAANXI PROVINCE'S RURAL ECONOMY 
 
SUMMARY 
------- 
 
¶1. (SBU) Rural-to-urban migration is the primary driver of Shaanxi 
Province's rural economy -- even in one village that receives strong 
financial support from the local government and an American NGO. 
Rural residents in Shaanxi are increasingly looking for 
opportunities in urban areas for both wage labor employment and 
education for their children.  At least 50 percent of rural incomes 
are derived from migrant remittances, which are wired home through 
local banks.  With so much labor movement to the cities, farmers and 
researchers in the province believe the hukou registration system 
has little practical influence on the lives of rural residents.  END 
SUMMARY. 
 
WHITE HOUSE FELLOWS VISIT TO CHINA 
---------------------------------- 
 
¶2. (SBU) A delegation of 12 White House Fellows visited China May 
19-26 with stops in Xian and Beijing.  The visit covered a wide 
range of issues but focused primarily on economic development.  The 
White House Fellows visited An Shang Village, located two hours west 
of Xian in Fufeng County, and exchanged views with village leaders. 
The delegation spent the night in the village on May 20, and they 
taught English at Fufeng High School during morning classes and 
discussed rural development with researchers at the Shaanxi Academy 
of Social Sciences on May 21. 
 
AN SHANG VILLAGE:  THE HEART OF THE NEW COUNTRYSIDE 
--------------------------------------------- ------ 
 
¶3. (SBU) An Shang Village's economy has developed rapidly during the 
past four years.  According to An Wei, a village leader and a member 
of the Sino-American Society, An Shang's establishment in September 
2003 of a Village Congress to improve governance and manage affairs 
kick-started a series of economic and political reforms that 
improved livelihoods for the 410 families (1,598 people) in the 
village.  An Shang completed its power supply system in 2003 and, 
with the help of local government funding, its first paved road in 
¶2004.  In 2005, An Shang Village, with funding from Global 
Volunteers, a Minnesota-based NGO, launched Project Peace to build a 
new school in the village.  The village opened a folk art gallery in 
April 2007 to help attract tourists to An Shang. 
 
¶4. (SBU) In the short term, An Shang's agricultural economy is based 
on grain production and small livestock businesses, An Wei said. 
Over the longer term, however, An Shang's local leaders are focused 
on education as a means to break the cycle of poverty.  The 
village's goal is to have 100 college graduates by 2012, and An 
Shang established an Education Committee, a volunteer organization, 
to work alongside the Party Committee and Village Committee and 
raise the profile of education issues in An Shang. 
 
MIGRANTS FUELING RURAL ECONOMY, DRAINING POPULATION 
--------------------------------------------- ------ 
 
¶5. (SBU) Just as in many other villages across China, the most 
important driver for the rural economy remains rural-to-urban 
migration.  According to An Wei, approximately 260 residents of An 
Shang have migrated to cities in Shaanxi Province, leaving the 
village with few young people.  Feng Jiedong, the Vice Chairman of 
the Village Education Committee, said that approximately 50 percent 
of village incomes are derived from migrant remittances, which are 
wired to relatives in the village via the Agricultural Bank of China 
(ABC), Rural Credit Cooperative (RCC), or Postal Savings Bank.  One 
farmer with a motorcycle told Econoff that motorcycles costing 
approximately RMB 4,000 (USD 500) are increasingly common, but none 
of the higher end consumer goods or nice houses would be possible 
without funding from outside sources, including migrant remittances 
or relatives living overseas. 
 
¶6. (SBU) Shi Ying, Deputy Director of the Shaanxi Provincial Academy 
of Social Sciences, said that An Shang's experience with 
rural-to-urban migration is representative of the province as a 
whole.  In southern Shaanxi, which is poorer than other regions, as 
much as 70 percent of rural incomes are derived from migrant 
remittances, and more than half of the villagers have moved to urban 
areas.  Migrants are so prevalent in Xian, Shaanxi's capital, that 
 
BEIJING 00003718  002 OF 002 
 
 
Shi estimates 1 million of the city's 7 million residents are 
migrants working in the construction industry.  As a result, the 
countryside is experiencing negative population growth, and rural 
residents are increasingly concerned about education for children 
whose parents are away from home. 
 
MOVING FORWARD WITH HUKOU REGISTRATION REFORM 
--------------------------------------------- 
 
¶7. (SBU) With labor moving virtually freely throughout the province, 
Shi said that the hukou registration system has little impact on 
labor mobility.  In Shaanxi Province, there still exists a 
distinction between a rural registration and urban registration, but 
the province slowly is eliminating that distinction per Central 
Government guidance.  For poor areas in Western China, including 
Shaanxi Province, providing equal levels of services (health care, 
education, social welfare) in urban and rural areas remains the 
greatest challenge due to lack of financial resources.  But in 
general, there is little practical difference in a legal sense 
between rural and urban residents, Shi said. 
 
¶8. (SBU) Comment:  Lack of practical difference regarding the hukou 
registration reflects intra-provincial movement only.  If Shaanxi 
residents wanted to relocate to Shanghai, for example, they would be 
unable to obtain social services and residency benefits under 
current rules.  End Comment. 
 
PICCUTA