THE GAP BETWEEN RICH AND POOR IN SHENZHEN

UNCLAS SECTION 01 OF 04 GUANGZHOU 010741

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E.O. 12958: N/A
TAGS: SOCI PGOV PHUM ECON EINV PINR CH
SUBJECT: THE GAP BETWEEN RICH AND POOR IN SHENZHEN

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1. (SBU) Summary: Much attention is being given to China's
growing rural-urban gap. At the same time, the gap within
urban areas, between established residents and migrants from
rural areas, is becoming more marked. Shenzhen, as China's
richest city, enjoys unparalleled prosperity, yet at the
same time it has more migrants than officially registered
citizens. These migrants face serious challenges, most
notably widespread wage defaulting on the part of employers.
In addition, although Shenzhen allows some migrants workers
to register as "temporary" residents, thus granting them
access to social services, more than a million of its
workers are still completely unregistered -- and
disenfranchised. As new workers arrive in Shenzhen (and
other Chinese cities) every day, more of them fall under
this category, increasing the potential for urban unrest.
End summary.


2. (SBU) With its recently announced plans to create the New
Socialist Countryside, China's central government clearly
signaled that it is paying close attention to the growing
gap between the country's urban and rural areas. China's
breakneck economic growth since the beginning of the reform
and opening period in 1978 has been due largely to the build-
up of the country's manufacturing sector, often at the
expense of its agriculture. The idea was that eventually
the riches would trickle down. However, the point is fast
approaching where the delicate balance between promoting the
country's overall growth and continuing to place rural areas
in the backburner becomes untenable, a fact that has not
escaped the Chinese leadership.


3. (SBU) One does not have to leave the confines of a large
Chinese city to see the gap in action. As more and more
migrants from rural areas file into the cities to take low-
paying jobs and escape the poverty of the countryside, the
gap is beginning to replicate itself in the cities, with the
breach between prosperous urbanites and disenfranchised
`waidiren' ('outsiders') becoming more marked by the day.
Some even suggest that real flashpoints of unrest in the
future will not be the villages, which are relatively small
and isolated, but the slums that are emerging as more
migrants arrive in the cities, finding a reduced number of
opportunities, and ultimately forming into an underclass.

A city of immigrants
--------------


4. (SBU) In exploring these issues in South China, Shenzhen
is a good place to start because it, more than any other
Chinese city, is truly a city of immigrants. Although the
city lies right between the two largest Cantonese-speaking
cities in the world, in Shenzhen Mandarin is the lingua
franca for its population drawn from all parts of China.
According to Cai Huanxing, of the Shenzhen Labor and Social
Security Bureau, Shenzhen's permanent population of 8.2775
million includes 4.7 million registered migrant workers.
These 4.7 million migrants are considered "temporary
residents;" the rest of the permanent population holds a
Shenzhen `hukou' (household registration). Additionally,
there are scores of unregistered migrant workers, whose
numbers probably exceed one million. With a history that
spans just over 25 years, Shenzhen can count few true
natives. It is therefore safe to assume that most of its
permanent population is originally from elsewhere. Of
course, the experience of urban transplants from Beijing and
other major cities has little in common with that of
migrants from the impoverished countryside and inland
provinces.

The lay of the land: From Eco-Square to Longgan
-------------- --------------


5. (SBU) Deng Xiaoping, Shenzhen's intellectual father,
would be proud of the scene at Shenzhen's Ecological Square.
Here, in the heart of a prosperous neighborhood, a true
Chinese middle class is at play. The impact of China's

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opening-up, spearheaded by the creation of special economic
zones (SEZ) in southern China (of which Shenzhen was the
first) has few expressions more tangible than these merry,
urbane folks walking their dogs and choreographing dance
routines in a public space that is, literally, an ode to
sustainable development. It is the success of people like
these that have made Shenzhen the richest city in China,
with the highest per capita income of the nation.


6. (SBU) Meanwhile, one does not have to leave Shenzhen's
municipal limits to find the Pearl River Delta of dusty
streets and decrepit buildings amidst which factories
staffed by young men and women from the Chinese hinterlands
toil away to churn out the goods that are cheaper to make in
China, largely because these young laborers are abundant,
and thus cheap. In between these two extremes, every
restaurant, hotel and sauna in the city provides a perch
from which young `waidiren' can take a peek, as outsiders,
at the other China, the one they were looking for when they
left their hometowns. At that time, many, if not most of
them, brimmed with excitement at the prospect of life in the
South's gleaming metropolis.

Rude awakenings
--------------


7. (SBU) However, a new life in the big city is not
necessarily a bed of roses. Working conditions in the
Delta's factories can be rough, with stories heard of forced
overtime, lockups, and even beatings. Usually lacking a
`hukou,' these migrants in effect become second-class
citizens, with reduced or no access to social services.
Their illegitimate status also makes them easy prey for
unscrupulous bosses who pay them less than "legal" workers.

Wage defaulting
--------------


8. (SBU) The most prevalent and serious problem faced by
Shenzhen's migrants is the wage defaulting by their
employers. According to the China Daily, in 2005, some
1,300 Shenzhen companies were fined a total of USD 5.87
million for defaulting on wages, while workers recovered USD
35.8 million in withheld wages during the same period.
During the lead-up to the Chinese New Year, the violation of
workers' right almost becomes institutionalized, as many
employers withhold wages in an attempt to force workers to
come back after their trips home for the celebration.


9. (SBU) When wages are withheld, the Shenzhen authorities
are ready to take "serious, effective measures" to help the
workers get their money back, according to Cai. In fact,
earlier this year, eight Shenzhen executives became the
first defaulters to be criminally prosecuted in China. A
recent edition of the Labor and Social Security Bureau's
magazine featured an article on this prosecution, complete
with pictures of the accused being presented to the public,
handcuffed and wearing black hoods, and flanked by police.
The initial thought that the hoods were provided to protect
the suspects' anonymity was dispelled when it was noticed
that their names were displayed on their standard-issue
prison sweatshirts.

A need to placate the masses?
--------------


10. (SBU) A move towards a more heavy-handed approach serves
more than just the pursuit of justice. As the gulf between
rich and poor grows in China's major cities, giving concrete
examples of how everyone is in fact equal before the law is
essential in preserving social stability. In fact, the
crackdown in Shenzhen came on the heels of much-publicized
protests and work stoppages by unpaid laborers, and was
perhaps aimed at placating the workers and discouraging
others from following their example.


11. (SBU) People's patience as they "wait for their turn"
may quickly wear thin if they perceive that the authorities
are, even indirectly, sanctioning their plight in order to
allow the privileged to get richer. In many locations in

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the countryside, this turning point has been reached. There
the spark usually involves land, or more accurately
inadequate compensation for it, aggravated by the corruption
of local officials. In the cities, where land is basically
a non-issue, in addition to wages, another potential bone of
contention is the issue of the `hukou.'

`Hukou' save lives
--------------


12. (SBU) Although some estimates place 150-200 million
Chinese living outside their official place of residence,
without a `hukou,' a person may be unable to receive even
basic public services in a given locality. Even
bureaucratic procedures such as securing a permit to visit
Hong Kong or Macau can only be undertaken in one's city of
`hukou.' In effect, the `hukou'-less workers are
undocumented aliens. According to one Delta resident, the
discrimination that the `hukou' issue creates is even
directly responsible for the deaths of children that, unable
to attend school for lack of a `hukou,' are left unattended
by their migrant-worker parents, and then fall to tragedy.


13. (SBU) Still, the issue of `hukou' reform is
controversial, although there are a growing number of voices
calling for it. Policymakers and urban residents alike fear
that such a liberalization of the rules would lead to an
even larger, potentially upsetting influx of more `waidiren'
to the cities. The irony, of course, is that the large-
scale, technically illegal migration that has occurred in
China has been fundamental to China's, and the Delta's,
remarkable economic growth in the past couple of decades,
which has pumped disposable income into the pockets of, more
than anyone else, city dwellers.

Shenzhen's model
--------------


14. (SBU) Shenzhen is one step ahead of the game in this
regard. Despite having a massive migrant-worker population,
most of it does not face the `hukou' issues that are so
contentious for millions of migrants across the country.
Since 1984, Shenzhen allows migrants workers to register as
"temporary residents," a status that, while short of full
"citizenship," still allows them to enjoy public service
benefits such as education for their children and access to
health care. Now, some 4.7 million migrants are considered
"temporary residents" of Shenzhen. In most other major
Chinese cities, there is no similar "in-between," and
workers that cannot become officially registered
(predictably, not an easy task) are often terribly
disenfranchised.


15. (SBU) Still, not all of Shenzhen's migrant workers are
registered. It is estimated that at least a million
migrants are not registered at all. As the city continues
to receive an influx of workers, which is expected, a larger
percentage of the city's population may fall under this
uncounted -- and disenfranchised -- category.

Urban concerns
--------------


16. (SBU) As the intra-urban gap grows, it is not just the
migrants' dissatisfaction that could fuel problems. The
more-established city dwellers are sometimes, more than just
aloof or self-centered, hostile to the `waidiren.' As we
mentioned above, many city dwellers oppose `hukou' reform,
and this is partly because of concern about the strain that
migrants place upon their cities. For others, the migrants
are not only a negative force in their city, but in fact the
alleged cause for some of their city's worst problems (which
ostensibly did not exist in the past or were less of a
problem). Yuan Yunzu, an organizer at the Disabled Workers'
Service Center and Sichuan native, frankly said that city
residents are often "afraid" of the migrants. One Guangzhou
native expressed her view that migrants were "dirty"
(`zang'),and that it was their bumpkin ways that made her
city dirty and unsanitary. Meanwhile, a Hong Kong
businessman attributed the rise in crime in both Shenzhen

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and Guangzhou to the increased presence of migrants, who
prefer the easy way of making money.

Comment: Keep your eye on the cities
--------------


17. (SBU) For many China-watchers, the villages in the
countryside are the place to watch as the concerns over
social stability in China continue. Without detracting from
that view, China's cities should not be discounted. As a
scholar noted recently, unrest in the villages is relatively
easy to quell, because of their small populations and their
isolation. If something goes wrong in a major urban center,
it could be a very different story.


18. (SBU) Moreover, cities are a gathering place for
migrants from all over the country, where they can exchange
stories and relate their experiences. Despite the large
number of "incidents" in rural areas (even as reported by
government authorities),the almost-negligible connection
between these incidents is remarkable. Part of this is due
to the fact that, again, these villages are relatively
isolated, making it hard for the villagers to see their
plight as part of a larger trend. Meanwhile, the cities can
provide the perfect forum for that to occur.


19. (SBU) With its relatively forward-thinking attitude
towards migrants, Shenzhen may be reducing its chances of
being a focus for unrest. By allowing most of its migrants
to register, it enfranchises them, and makes them less
likely to be critically disenchanted. At the same time, the
city is the richest in China, and its outward signs of
affluence may accentuate the gap between the haves and the
have-nots. Recently, the city government fast-tracked the
residency permit for a beauty queen from the Northeast, so
that she could represent Shenzhen in upcoming events. The
city leaders were probably motivated by civic pride, but for
many `waidiren,' it was a slap in the face. Likewise, the
wealth and prosperity that so many in Shenzhen enjoy, and of
which the city leaders are understandably proud, may in
other quarters cause resentment and, although we hope not,
anger.


20. (SBU) What is clear, however, is that Shenzhen is a
unique city, and its experiences may or may not apply across
the board, even within the Pearl River Delta. In the coming
months, we plan to explore these issues in other cities in
South China.

DONG