It is a truism that China’s continental size makes generalizations about any aspect
of its social and economic change hazardous. Accordingly, analysis of the regional
dimension and implications of national developments is an essential part of any
exercise. In this context for example, it is noteworthy that off-farm
rural job creation has been heavily concentrated in China’s coastal provinces. In
2004, for example, 57 percent of all TVE workers throughout the country were
employed in just ten eastern coastal provinces, whose higher efficiency than
elsewhere was also highlighted in their disproportionate contribution (72.5 per-
cent in 200325) to TVE value-added. By contrast, in the same year the 12 prov-
inces that are the focus of the national strategic initiative to “open up the West”27
accounted for barely 20 percent of total TVE employment (2004) and a mere
13 percent of value-added (2003). They point to the existence of a regional employment triptych, associated with the different balance between rural farming and non-farming
activities.
In 2004, whereas the farm sector accounted for little more than half of rural jobs in eastern coastal areas not coincidentally, the region containing the provinces that had benefited dis-
proportionately from post-1978 reforms – in non-coastal central provinces the
corresponding figure was 64 percent, and in western China, 76 percent. From
east to west, industrial manufacturing alone absorbed 19 percent, 9 percent and
5 percent of rural employment in the three regions. Stated differently, the regional
analysis highlights the higher proportion of the rural labor force engaged in non-
farming – which means higher-income – activities in the east, compared with
other parts of China. Concealed in the figures is the additional important find-
ing that of those working solely or primarily in farming, a higher proportion
in interior regions is dependent for a living on agricultural activities, especially
crop farming, that offer relatively low incomes than is the case among farmers in
eastern coastal provinces.
In short, since the mid-1980s increases in rural income accruing to those living
in the coastal regions have derived – increasingly so, as time series data would
show – from higher-return, non-farming activities. At the same time, the evi-
dence shows that for those coastal residents still tied to farming for a living, rises
in agricultural income have come increasingly – and to a greater extent than in
other regions – from the pursuit of farming activities outside the cropping sector
(above all, from fishing and animal husbandry). Such findings have important
implications for employment policy in China.
Reference was made earlier to the massive overhang of surplus rural labor – the
phenomenon is in fact overwhelmingly agricultural – inherited from the Mao
Era. Putting a figure on the scale of the surplus poses seemingly intractable dif-
ficulties. Suffice to say that at the time of writing this, Chinese sources continue
to refer to the existence of 150 million potential migrants “awaiting to transfer
from rural to urban areas.” Nor should one automatically assume that continu-
ing rapid economic growth will bring a swift resolution to the employment chal-
lenge posed by the huge numbers of under-employed farmers and rural laborers.
In a recent (2005) article, it was suggested that by 2020 between 100 and 150
million surplus rural laborers would have joined the flow of migrants out of the
countryside.
Recent estimates of the regional distribution of surplus laborers do not appear
to be available. A priori reasoning would, however, point to the likelihood of
higher agricultural and rural under-employment existing in interior regions than
along the coast.
The regional distribution of surplus rural labor can be characterized in terms
of a rough dichotomy between eastern and western, coastal and interior regions.
In terms of the regional triptych referred to earlier, the most striking finding for
1998 is the sharp difference in rural labor supply conditions between western
China and the rest of the country. It is instructive, for example, that the 12 west-
ern provinces, which in 1998 contained 30 percent of China’s rural population,
accounted for 41 percent of its surplus labor. By contrast, the corresponding fig-
ures for the nine central and north-eastern provinces were 34 percent and 32.5
percent; and for the ten coastal provinces, 35.8 percent and 26.8 percent.
However, the degree of disaggregation captured in this table is fairly small,
and concealed in the estimates for each broad region are major differences in the
scale of rural under-employment between individual provinces. In interpreting
the provincial figures, a distinction may usefully be made between levels and
rates of surplus labor. For example, in 1998 a surplus labor ratio in excess of 60
percent existed in five western provinces, compared with only one in their cen-
tral and north-eastern counterparts – and none along the coastal seaboard. But
while the western region includes the province with both the highest recorded
surplus rural labor ratio (Qinghai) and the highest absolute level of surplus labor
(Sichuan), it is noteworthy that in 1998 the provinces that ranked second, third,
fourth and fifth after Sichuan in terms of absolute under-employment were in
central and eastern China.
The inference I draw from the estimates is that while
they are certainly carry important employment policy implications, they are
not a sufficient basis on which to make policy recommendations. The reality
of demographic and employment conditions in China has been and remains
extremely complex. The most obvious finding that emerges from the figures
is the huge potential for rural out-migration contained in them. From the per-
spective of 1998, this potential was already being realized and the momentum
of such migration has been maintained down to the present day. But the factors
shaping population movements are enormously complex and patterns of migra-
tion reflect more than the mere existence of large labor surpluses and high
rural surplus ratios. So much is apparent from the fact that three coastal prov-
inces which have been major recipients of rural migrants – Zhejiang, Fujian and
Guangdong – had the highest surplus labor ratios in the entire seaboard region
in 1998. An analysis of the main provincial sources of rural migrants reveals
similar apparent anomalies.
What the estimates show unambiguously is that except for Yunnan and
Xinjiang, the most remote south-western and north-western provinces of China
faced the most serious incidence of agricultural under-employment. Inherent in
this finding was the likely existence in these regions of a vicious circle. On the
one hand, the burden they faced in finding employment outlets for surplus farm
labor was greater than in other parts of the country. On the other hand, the
remoteness of these regions and their innate poverty deprived them, to a greater
extent than elsewhere, of the means – whether in terms of the availability of
funding or of markets – whereby they might successfully embark on a program of
indigenous rural employment creation.
