SOS China - The Truth Chapter 1

I. Land Reform—Eliminating the Landlord Class

Barely three months after the founding of communist China, the CCP called for the elimination of the landlord class as one of the guidelines for its nationwide land reform program. The party’s slogan “land to the tiller” indulged the selfish side of the landless peasants, encouraged them to struggle with the landowners by whatever means and to disregard the moral implications of their actions. The land reform campaign explicitly stipulated eliminating the landlord class, and classified the rural population into different social categories. Twenty million rural inhabitants nationwide were labeled as “landlords, rich peasants, reactionaries, or bad elements.” These new outcasts faced discrimination, humiliation, and loss of all their civil rights. As the land reform campaign extended its reach to remote areas and the villages of ethnic minorities, the CCP’s organizations also expanded quickly. Township Party committees and village Party branches spread all over China. The local branches were the mouthpiece for passing instructions from the CCP’s Central Committee and were at the frontline of the class struggle, inciting peasants to rise up against their landlords. Nearly 100,000 landlords died during this movement. In certain areas the CCP and the peasants killed the landlords’ entire families, disregarding gender or age, as a way to wipe out completely the landlord class.

In the meantime, the CCP launched its first wave of propaganda, declaring that “Chairman Mao is the great savior of the people” and that “only the CCP can save China.” During the land reform, landless farmers got what they wanted through the CCP’s policy of reaping without laboring, robbing without concern for the means. Poor peasants credited the CCP for the improvement in their lives and so accepted the CCP’s propaganda that the Party worked for the interests of the people.

For the owners of the newly acquired land, the good days of “land to the tiller” were short-lived. Within two years, the CCP imposed a number of practices on the farmers such as mutual-aid groups, primary cooperatives, advanced cooperatives, and people’s communes. Using the slogan of criticizing “women with bound feet”—i.e., those who are slow paced—the CCP drove and pushed, year after year, urging peasants to “dash” into socialism. With grain, cotton, and cooking oil placed under a unified procurement system nationwide, the major agricultural products were excluded from market exchange. In addition, the CCP established a residential registration system, barring peasants from going to the cities to find work or dwell. Those who are registered as rural residents were not allowed to buy grain at state-run stores and their children were prohibited from receiving education in cities. Peasants’ children could only be peasants, turning 360 million rural residents of the early 1950s into second-class citizens.

Beginning in 1978, in the first five years after moving from a collective system to a household contract system, some among the 900 million peasants became better off, with their income increasing slightly and their social status improving somewhat. However, such a meager benefit was soon lost due to a price structure that favored industrial commodities over agricultural goods; peasants plunged into poverty once again. The income gap between the urban and rural population has drastically increased, and economic disparity continues to widen. New landlords and rich peasants have re-emerged in the rural areas. Data from Xinhua News Agency, the CCP’s mouthpiece, show that since 1997, the revenue of the major grain production areas and the income of most rural households have been at a standstill, or even declined in some cases. In other words, the peasants’ gain from agricultural production did not really increase. The ratio of urban to rural incomes has increased from 1.8 to 1 in the mid 1980s to 3.1 to 1 today.

Business Week January 2011 said

China's Growing Income Gap

Billions in unreported income for the wealthy and a system that blocks health and pension benefits for migrants mean the income gap is wider than acknowledged

By Dexter Roberts

It takes about three hours by bus from the glitzy malls of central Beijing to reach Yongfengtun, a farming village northwest of the capital that has quadrupled in population, to 20,000, over the past few years. Here one finds a gritty version of a Chinese bedroom community. Grimy storefronts advertise cheap clothing, shoes, and budget mobile-phone service. Mangy dogs root through piles of trash on the bicycle- and pedestrian-crowded streets.

Yongfengtun's streets may be rundown, yet they attract thousands of migrant workers and the so-called ant tribe (cash-strapped urban youth) from across all China. "It's cheap!" says one 23-year-old, a recent college graduate who pays $39 a month for a 65-square-foot apartment. "Heat costs money," he says ruefully as he kicks a pan of water for washing laundry that has frozen solid. "There is no way I could afford an apartment in central Beijing," with rents probably 10 times higher for a comparable place, he says.

It's not as if incomes are stagnant in China—anything but. In the first half of 2010 per capita income rose 13 percent in the countryside, to $935 a year, and 10 percent in the cities, to $2,965 a year. Nevertheless, swelling slums in the suburbs of Beijing, Shanghai, and Guangzhou attest to a yawning wealth discrepancy between thousands of newly minted rich and millions of poor.

China already is showing levels of inequality comparable to the Philippines and Russia and is far less egalitarian than Japan, the U.S., and even Eastern Europe, according to Li Shi, an authority on income distribution trends at Beijing Normal University. Official figures show rural incomes are less than one-third those in cities, with the top 10 percent of urban Chinese earning about 23 times that of the poorest 10 percent—a ratio that is almost certainly understated, according to Li. "You can find increasing income inequality almost everywhere in China today," he says.

One reason is a system that blocks an estimated 150 million or more rural migrant workers from gaining access to benefits such as health care, education, and pensions available to urban residents. As a result, migrants are forced to save more of their wages to cover medical expenses and their retirements, says Li. Their incomes are also getting pinched by higher food prices (inflation is hovering around 5 percent) and rising housing prices (up 6.4 percent in December on an annual basis).

China's Gini coefficient, an income distribution gauge used by economists, worsened from below 0.3 a quarter-century ago to near 0.5 today, says Li. (The measure, named after Italian statistician Corrado Gini, ranges from 0 to 1.) Poverty researchers recognize anything above 0.4 as potentially socially destabilizing.

China's wealth gap may be worse than official statistics indicate. The incomes of better-off families are understated, says Wang Xiaolu, an economist at the independent National Economic Research Institute in Beijing.

Undisclosed income, which Wang says could add up to $1.4 trillion annually, ranges from kickbacks to businesses or government to perks such as subsidized housing offered by state-run companies. If so, the wealthiest 10 percent of the population earned 65 times that of poorest 10 percent—not the 23 times shown by government data.

President Hu Jintao's government is keenly aware of the problem. Policies aimed at lifting incomes include the 2006 abolishment of the agricultural tax, new central and local government mandates to fund nine years of free education, improved health care, and the construction of low-income housing.

Further narrowing of the income gap will require changes in fiscal policy, says Louis Kuijs, a World Bank economist in Beijing. Expanding government revenues beyond taxes on wages to include levies on property, as well as on income earned from capital gains on real estate and stocks, is one step, say Kuijs and economist Wang. Continued reform of China's household registration system, to allow migrants more access to social welfare benefits, is also necessary. A survey done last September by Horizon Research Consultancy Group, a Beijing researcher, showed a drop in life satisfaction and declining confidence about China's future, despite the country's double-digit growth rates. With food and housing prices rising, "people feel their quality of life has gone down," says Victor Yuan, founder and chairman of Horizon.

The bottom line: The gap between rich and poor in China is wider than generally realized and could create political problems for Beijing.

For more facts and statistics, please visit
http://www.china-mike.com/facts-about-china/facts-rich-poor-inequality/