URBAN-RURAL INCOME GAP NARROWING IN JIANGXI THANKS TO

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