BUSINESSWEEK ONLINE : DECEMBER 11, 2000 ISSUE
INTERNATIONAL -- ASIAN COVER STORY

The Great Migration (int'l edition)
Chinese peasants are fleeing their villages to chase big-city dreams

When I first met Mo Meiquan, in August of this year, she looked small and very young in her light-blue work smock. Just 18, she was clearly nervous about talking to a foreign reporter, maybe because we were sitting in a restaurant just across from the gates of Triton Media Co., where she worked checking video and audiocassettes for flaws. Winning her trust was crucial, because I hoped to understand what had prompted her to forsake her village in China's Southwest for the grinding life of an assembly-line worker in the nation's export belt. Meiquan assiduously avoided my gaze as she described the long hours and repetitive work that dominated her life.

The next time I saw Meiquan, she was a woman transformed: smiling, confident, and only too happy to talk. It was eight weeks later, and she was back in her ancestral village of Binghuacun. Meiquan's hometown is many miles--and centuries of culture-- away from the city where she had been working. Getting there from Dongguan involves a 29-hour train journey, two hours in a bus, and a one-hour ride through mountainous terrain in a pony cart. Finally, Binghuacun appears over the brow of a hill, a cluster of 50 or so ramshackle wooden houses clinging to a steep green slope. Like many other Chinese villages, it is home to one extended clan: In this case, everyone is named Mo.

After more than two years away, Meiquan has returned to help her parents and two brothers bring in the autumn rice harvest. In some ways, she feels it's good to be back. Walking along the muddy lanes, she is something of a celebrity in her bright-red vest and black dress shoes. Her relatives, many dressed in the blue homespun cloth worn by the local Buyi minority, are eager to hear her tell of life in the big, far-off city. They pester her with questions about how much money she makes and what it's like to work in a factory. Meiquan revels in the attention.

But after a few days, village life becomes tedious. There are no phones in Binghuacun, so she can't call her friends in Dongguan. There are no bustling street markets to shop for new clothes or the latest pop music. And she frets about not making cash at home. Soon, Meiquan is spending much of her time commiserating with her distant cousin Mo Yukai, also home temporarily from Dongguan. But to return to the southern Pearl River Delta city, Meiquan needs a new identity card to replace one that has expired. Without it, she risks being picked up in a police sweep. As she awaits official approval, she dreams of her new life in Dongguan.

UPSURGE. Meiquan is part of an unprecedented exodus of peasants. In their tens of millions, they are leaving impoverished villages in search of the Chinese Dream: a decent job that will buy them the trappings of modern life. Over the past dozen years, 60 of the 300 people in Meiquan's village have hiked over the mountains and climbed aboard buses and trains. A similar shift is under way in villages all across China, and nowhere more so than in the economically backward western hinterland.

As growth in the countryside stagnates, these young people are leaving the fields forever, breaking with a centuries-old way of life. They become the workers who toil in China's factories, keeping the nation's crucial export machine humming. They build the roads, bridges, and office towers of the country's great cities. They make the Nikes, Barbies, and CD players that end up on shelves in the U.S. and Europe. This floating labor pool easily rates as one of the greatest migrations in history. As many as 100 million Chinese are on the move.

Today, migrants such as Meiquan are Beijing's top preoccupation. They are capable of bringing China either economic salvation or violent revolution. For much of the 1990s, officials fretted about the ailing state-owned sector, because they feared laid-off workers would foment unrest. Now, Beijing is focusing on the countryside, where tensions are rising as the income gap between city and village yawns ever wider (table, page 43). China's leaders know that keeping these people on the farm is to risk a social convulsion they would be hard-pressed to stop. But they fear removing restrictions on internal travel, lest peasants descend on the cities en masse and spark instability at the heart of China's export zone.

Already, strikes and protests against rapacious officials, factory abuses, and taxes are a daily event across the nation. According to Hong Kong's Information Center for Human Rights & Democracy, the number of large-scale protests since 1998 has nearly tripled, to 170,000 this year. Many of the demos are breaking out in the cities, where angry, laid-off state-enterprise workers and mistreated rural migrants make for a volatile mix. So far, the authorities have allowed the workers to vent their passion without losing control. But the rise of such unrest in what is still technically a socialist workers' state is disturbing indeed. China's current leaders ''came to power on the back of a peasant revolution,'' notes Thomas Bernstein, a professor of political science at Columbia University. ''To think that the peasants might riot against them is a very shocking thing.''

SQUEEZED. As the pressure builds, it's clear that the world's most populous nation is in the midst of a grassroots revolution. China is being transformed from a rural, agricultural nation to an industrialized, urban one, and millions of peasants such as the Mos of Binghuacun are being squeezed by the change. Because China is so large, and because it is ruled by a Communist Party that values stability, order, and control above all, those pressures are seldom visible to outsiders. But Beijing's leaders are only too aware of them, and so, after years of tacitly accepting the floating population of migrant workers, they are finally getting serious. In a potentially major development, officials are now debating whether to begin relaxing half-century-old rules that officially confine rural citizens to their villages. Such rules have been flouted for years, but the new policies being considered would allow migrants more freedom to legally move to the cities on a permanent basis.

Beijing has two main goals: One is keeping track of all these people. When officials conducted a census in November, they found migrants living in the cities extremely leery of divulging personal information, for fear of being sent home. The second goal is economic: Beijing knows it must close the income gap between the cities and countryside, and one way to do that is to encourage the flow of villagers to the urban centers, so they can send some of their factory wages back home. Boosting the rural economy is crucial, because once China enters the World Trade Organization next year, the nation's 800 million farmers will not be able to compete with the cheap grain and meat produced by North American and European agribusiness. Moreover, if these newly minted urbanites become sufficiently prosperous, they could unleash a new surge in domestic consumption that could fuel growth for decades.

MAKE OR BREAK. The danger is that if the government does not damp down the migrant problem before the protests worsen, hard-liners could seize their chance to reverse reform. A conservative, antimarket backlash would undoubtedly scare off foreign investors. In the most extreme scenario, farmers, workers, and students might band together to challenge the leadership's hold on power. ''China's farm workers have been marginalized and discriminated against,'' says Hu Angang, a senior researcher at the Chinese Academy of Sciences. He reckons the migrant population will double in the next few years. What happens next is largely uncertain. But it's clear that Beijing's leaders are turning their full attention to the people who could make or break China.

It is easy to see what motivates people like Meiquan to leave places such as Binghuacun. Country life in such parts of China has changed little in generations. People cook over open hearths in simple, wooden houses. They use outhouses. They work hard for meager rewards. Consider 32-year-old Mo Wenzhi. His family is lucky to make $100 a year--by farming one-tenth of an acre of rice, corn, and red chili peppers. The cost of fertilizer and pesticides and the rural taxes leave Wenzhi's family with barely enough to put food in their bellies. So in 1989, he left Binghuacun and now works as a factory cook in Dongguan. He frets constantly about his ailing mother, his wife, and a 4-year-old daughter he left behind. ''It's so hard to make money from the land,'' he says.

Throughout its history, China has struggled to keep peasants such as Wenzhi under control. In the 1940s, Mao Zedong harnessed their pent-up resentment to pave his path to power, but then he chained the farmers to the land, withholding privileges enjoyed by the urban elite. In the late 1970s, Deng Xiaoping's economic reforms sparked unprecedented development along China's coast--but left the hinterland largely untouched.

Since Deng unleashed those revolutionary economic forces 22 years ago, tales of unfathomable riches have traveled inexorably inland--even as far as Binghuacun. For Meiquan, they arrived courtesy of her adventurous older relative, Mo Rubo, who had left in 1993 and today earns $120 a month working as a welder at the Taiwan-owned Shiqing Machinery factory in Dongguan. Explaining why she decided to leave behind all she knew, Meiquan says: ''I thought there was a whole world out there that must be very different from the village. And I decided leaving was the only way to improve myself.''

ALIEN PLANET. With mixed emotions, Meiquan, who left school at 15, boarded her first-ever bus in June, 1998. Thirty hours later, she arrived in Dongguan, a chaotic city where Hong Kong and Taiwanese businessmen live in luxurious villas and their workers inhabit shabby dormitories that are cold and damp in the winter and stifling in summer. For Meiquan, it was like landing on an alien planet. Her first job was making belt buckles at a Hong Kong-owned factory in the industrial suburb of Humen. Meiquan's task involved polishing metal molds for 12 hours a day. For this finger-numbing labor, she earned $30 a month--depending on how many molds she finished.

Conditions got decidedly worse when the factory got an unusually large order--$340,000 worth of belt buckles that had to be finished within a few days. Her Hong Kong boss told Meiquan and her co-workers that no breaks would be allowed until the order was completed. After working 48 hours straight with almost no rest, Meiquan decided she had had enough. Along with some 100 of the factory's 400 workers, she quit on the spot. ''We were so angry,'' says Meiquan. ''I decided that even money wasn't that important.''

The tyranny of bosses is far from the only hardship migrants endure. In one of his first trips outside the village, Rubo had no sooner alighted from the train in Ningbo, a wealthy coastal city near Shanghai, before knife-wielding thugs robbed him of $20, all the money he had brought along. In a common scam, migrant workers find themselves victims of phony job-search companies. They pay a variety of fees, but the promised work never materializes.

Working conditions can be brutal and unsafe (page 46). And prejudice is rife. Migrant workers are blamed for the crime afflicting China's cities. Just down the street from the Shiqing Machinery factory, where Wenzhi and Rubo work, is an opulent compound for factory bosses and rich locals. A guard stands at the gate, and migrants are warned to stay away. ''People know we're poor and often don't have much education,'' says Rubo, who left school at 15 to help his parents in the fields.

Moreover, migrants increasingly find themselves subject to local restrictions that seem to change by the day. They are forced to pay a series of fees ranging anywhere from a day's to a couple of week's pay: $3 for a work permit, $7 for a health permit, and $15 for a temporary residency permit. And cities such as Beijing, Shanghai, and Tianjin ban them from working their way up to better jobs. They want to keep those for local citizens laid off by state enterprises.

At the same time, permits are used to control and fleece migrants. They vary from place to place and range from requirements that migrants document their compliance with birth-control policies to others proving temporary residency. Without the correct paperwork, they can find themselves tossed in grim detention centers and held until friends or relatives can bail them out. These centers are infamous for their poor food and inadequate sanitation as well as beatings and forced labor. And migrants often are returned to the countryside. Wenzhi, the cook, was picked up twice but luckily had the $12 to make bail.

Another man from Binghuacun wasn't so lucky. He was incarcerated for three months in a detention center in Huizhou, Guangdong. Wenzhi says the ordeal so frightened the man that he returned home and may never set foot in a city again. Precisely such worries sent Meiquan packing for Binghuacun, where she is stuck waiting the three months required to get a new identity card. It will provide her with some security in the big city, and it allows her to apply for a temporary residency card and work permit. ''Without doing all of this,'' she says, ''I could risk getting picked up.''

Nonetheless, Beijing seems increasingly prepared to allow migrants to move more freely about the country. Behind closed doors, analysts say, top officials, including President Jiang Zemin and Premier Zhu Rongji, are reviewing ways to gradually loosen controls over migration. Among the changes being considered are those that would make it easier to change residency permanently and doing away with hiring practices that discriminate against migrants. But real change may have to wait until the 16th Party Congress in 2002.

Ultimately, of course, Beijing's leaders hope most migrants such as Meiquan return to their villages on a permanent basis. The idea is that these rural folk, many of them illiterate, will take back skills picked up in the cities. In the meantime, the government hopes that money the migrants send home--already as much as $14 billion a year--will help boost rural economies.

BIG PLANS. In the villages, a little seed capital goes a long way. So far, Meiquan has sent $241 to her father. He used it to buy an $85 threshing machine, fertilizer, and four piglets. Before buying the thresher, he had spent $72 a year renting one from his neighbor. Altogether, such remittances have helped buy 10 such machines in the village. Meiquan's father plans to sell his pigs during Chinese New Year and make a profit of $163.

Binghuacun's party secretary, Mo Wenke, frets that local farmers will not be able to compete once China joins the WTO. He proposes opening a processing factory for red chili peppers or potatoes, two cash crops that locals have taken to planting in recent years. ''Of course, they should come back to invest,'' he says of the young villagers who have left for the city. ''If they start a business, they can help us sell our products. If they open a factory, we can process our local products and raise incomes in the village.''

Beijing has even bigger plans, such as helping create more companies like Chaoda Modern Agricultural Holdings. From its base in Fuzhou, Fujian, Chaoda already has 21 farms growing 35 types of vegetables and eight varieties of rice on 7,000 acres, scattered across several provinces. Now, Beijing has given Chaoda the green light to list its shares in Hong Kong and so raise money for future expansion across China. This is all part of government policy to consolidate the nation's fragmented, small-scale agricultural sector in preparation for international competition.

Remote villages such as Binghuacun are unlikely to see any investment from companies such as Chaoda, however. Even a plan to widen the village's main road is going nowhere. After two years of wrangling between two nearby cash-strapped township governments, most villagers still travel by foot or pony cart. ''Without a new road,'' says party secretary Mo Wenke, ''our village will never develop.''

Other villages have even bigger problems. Anger is mounting as local governments levy ever heavier taxes as they lose funding from Beijing, often without returning any new services or infrastructure. ''We don't want to pay these taxes,'' says Wenzhi. ''The local cadres don't do much to help us. But we have no choice.'' The tension between rural farmers and local officials is likely to worsen in coming months, as Beijing continues to cut funding to the townships. Binghuacun's farmers have yet to rise up in anger, but resentment over high taxation has prompted thousands of protests in other rural provinces.

RIGHTS AWARENESS. In August, more than 10,000 farmers in Jiangxi took to the streets for several days, burning police cars and besieging government offices. Local officials had tried to quash an official pamphlet that outlined which taxes were acceptable and which were not. Vice-Premier Wen Jiabao, who is widely tipped to be China's next Premier, in 2003, has repeatedly spoken out opposing high taxes on farmers and highlighting the need to reduce the size of township governments, as did Premier Zhu during an inspection tour in Shandong province in mid-November.

While Beijing is counting on migrant workers eventually to take their business skills back to the countryside, it is equally likely that the migrants will be bearers of new ideas, some of them not welcomed by local party officials. Already, those young returnees are rejecting local traditions such as arranged marriages: Yukai did so--a severe disappointment to his father.

More important, migrants are becoming more aware of labor rights as they come into contact with other workers across China and read about labor abuses in such muckraking newspapers as Southern Weekend, which is published in Guangzhou, the capital of Guangdong province. Migrants are beginning to understand what is guaranteed them by China's strongly worded but little-enforced labor laws. ''Usually, the law doesn't work,'' says Rubo. ''But if I have a problem, I will check out what my rights are.'' As a result, more migrants are organizing to protect their interests.

They also are aware that government pledges of aid have not been fulfilled. For example, a job-training program is aimed almost exclusively at laid-off employees of urban state-owned enterprises--despite pledges to include migrant workers. Similarly, plans to institute a nationwide social security network within three years in reality will cover only urban residents, admits Hu Xiaoyi, an official of the Ministry of Labor & Social Security. For Wenzhi, who was able to complete only four years of school before starting work in the fields, this is bad news. ''Of course, I would like to take advantage of government training and aid programs,'' he says. ''Without an education, it's so hard to find a decent job.''

Faced with Beijing's unwillingness to extend them such benefits as health care, education, and pensions, migrants are taking matters into their own hands. Migrant communities in cities ranging from Beijing to Shanghai to Guangzhou have created their own schools and clinics. ''As long as one has the money,'' says Rubo, ''we can take care of everything.'' Moves such as this are just one more way that the massive migration is loosening the Communist Party's control over not only the countryside but the entire nation.

The reality is that more and more migrants will become like Mo Rubo. Despite a robbery and tough living in the big cities, he has no intention of returning to the village. In his search for a better life, Rubo has worked in four provinces and a score of menial jobs. He is confident that his future will improve, and that he, rather than Beijing, will be responsible for that. Someday, Rubo wants to start his own business selling machinery parts, rather than making them, as he now does in Dongguan.

As millions more Chinese peasants follow his path, moving their jobs and lives beyond the familiar orbit of party control, China is entering uncharted territory. Whether or not the government manages to handle the unfolding economic and social revolution is impossible to predict. But one thing is clear: Men and women like Rubo and Meiquan will play a major role in forging China's destiny--just as Mao originally intended.

BY DEXTER ROBERTS

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