Thursday, February 26, 2004

China's Urban Workforce Fuels Rural Economy

Ah... finally a little economic information on what's happening in inland China. Whether she is planning this or not it is going to make China a powerful force in the future. Just imagine the new roads and infrastructure she will need. What a dynamo coming.

China's urban workforce fuels rural economy
By James Kynge

Remittances from China's fast-growing urban labour force are on track to overtake agriculture as the biggest income generator in the rural areas they left to find work, a new survey shows.

Research by the agriculture ministry's think-tank found an estimated 98m rural residents who worked away from their villages sent or carried home a total of Rmb370bn (about $45bn) in 2003, an increase of 8.5 per cent over the previous year.

China has made raising rural incomes a priority because without a consumer society in the vast rural sector, the nation could not hope to sustain its rapid economic growth, said Chen Xiwen, a leading Beijing policymaker.

But the greater reliance of China's rural population on industrial incomes could be a cause of concern should anything interrupt China's economic growth.

The contribution of migrant workers to the rural economy reflects the wider dependence on foreign direct investment and exports.

Of an average peasant income of Rmb2,618 last year, the contribution from agriculture fell below 60 per cent, while the contribution from migrant workers' earnings rose eight percentage points to more than 40 per cent.

Worker remittances do more than any other single infusion of funds from the central or local governments to promote the rural economy. Average spending on consumer durables such as televisions, air-conditioning and washing machines rose last year by 17 per cent to an average Rmb92.4 per rural household, the survey said.

The average net annual income of migrant workers, after living and travel expenses, came to Rmb3,768 last year, according to the survey, which was based on interviews in 20,089 rural households in China's 31 provinces.

The rural sector is generally considered a drag on China's growth, but signs of increasing spending are emerging in villages and towns. In Shanxi, the coal producing heartland, former peasants earning about Rmb1,400 a month in the mines have generated considerable demand for products such as motorcycles costing between Rmb3,000 and Rmb4,000, shopkeepers in the town of Jiexiu said.

An executive at Jialing, one of China's largest motorcycle manufacturers, said demand from such quarters had created a market that grew at 20 per cent last year. "The rural areas have become our major battlefield. We should stake our claim there as the peasants are getting richer after working in towns." ...Link

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