It came as no surprise that the issues of affordable housing and growing income disparities featured prominently in Premier Wen Jiabao’s address to the National People’s Congress. Despite upward shifts in industrial wages, the gap between urban and rural citizens continues to widen. With little mitigation of consumer inflation growth on the horizon, the squeeze on lower income groups is becoming more acute.

Given rapid rates of urbanization, it is increasingly difficult for blue- and some white-collar workers to secure adequate housing. The government’s pledge to boost the number of affordable homes this year is meant to assuage growing popular anger, but it will take more than speeches and targets. Beijing will have to deliver this time and remove any financial or bureaucratic barriers that stand in its way.

The government has pledged to funnel US$198 billion into the construction of new subsidized apartments this year, up from the US$118 billion it earmarked for affordable housing in 2010. It also said it will build 10 million affordable homes across the country. This is significantly higher than the target of 5.9 million units set for 2010. 

It is an impressive figure, but the government has repeatedly failed to uphold previous public commitments to increase the supply of affordable housing. Infrastructure and low-income housing were meant to have taken the lion’s share of the US$586 billion stimulus package announced in 2008. The new roads, bridges and rail lines are very much in evidence – but while much housing was built, precious little of it was affordable. 

One of the problems has been the recalcitrance of local governments, which have been slow to utilize land reserved for low-income housing. Out of the 184,700 hectares of land set aside for affordable housing projects last year, nearly a third – 59,300 hectares – remains unused.

But provincial bosses can hardly be blamed for dragging their feet. Beijing’s push for a massive boost in supply of low-cost homes is costly for localities. Of the some US$200 billion in planned expenditure, only US$76 billion will actually come from central coffers – the majority will come from local government budgets, already drained by spending mandates for other infrastructure projects.

More importantly, local governments face losing out on the juicy premiums they get from flogging parcels of land to commercial developers. In some cases these sales account for up to 25% of annual government revenues.  

Local governments and developers also need greater incentives to build low-cost housing, which Beijing has yet to provide. At present, the profit cap on sales of low-cost apartments and houses is 2-3%. Wen has previously suggested that local housing initatives in Hong Kong and Singapore could serve as models. These governments have managed to create successful low-cost homes markets through combinations of price caps and subsidies supplemented with government-owned low-rent apartments.

But first, Beijing must find the money – an additional US$124 billion – to succeed in this year’s housing push. Professional property developers will be understandably slow to jump into what appears to be a not-for-profit industry, particularly as prospects for commercial housing sales darken. Institutional investors will also want to see what form the financial and political structure of this burgeoning sector will take before attaching their names to it.

While cash is important, how it’s used is critical. There are currently several central government agencies involved in overseeing low-income housing – the National Development and Reform Commission, the Ministry of Housing and Urban-Rural Development, and the Ministry of Land and Resources. Add to that the multitude of regional departments, each with their own subdivisions, and very quickly the need for decisive leadership becomes apparent.

In the absence of any one department with ultimate responsibility for the execution of this crucial task – a “housing czar” – central directives are administratively doomed from the outset. Without some sort of reform, Beijing’s good intentions and generous funding will be squandered, again.

China’s one-child policy has always been controversial on human rights grounds, but to central planners it was an unpleasant necessity. Where Mao supported population growth with the argument that a human had “one mouth, two hands,” his followers were horrified by the population explosion that ensued, composed as it was mostly of poor peasants.

Chinese leaders have rarely been intimidated by nature, human or otherwise; where Mao tried to eliminate sparrows, Deng and his reformers tried to block the human reproductive drive through policy. Now the whole project is being reconsidered. It may be too late.

As with the campaign against the sparrows, the one-child policy had unintended consequences. If it was intended to buttress women’s rights, it was a signal failure. Setting aside the question of whether the right to decide childbirth in either direction is a woman’s right, it unquestionably resulted in massive abortions of female fetuses, and an ensuing gender imbalance.

If it was intended to reduce demand placed on natural resources, it also failed. China’s current greed for resources is not driven by the consumption demand of the average citizen, but by inefficient heavy industry and sloppily insulated buildings. Thus energy demand has increased alarmingly even as population growth has slowed. Furthermore, as the US shows, one can consume far more than China does with only a sixth of the people.

Now the central government is considering relaxing the policy and allowing families to start having two children – indeed, Shanghai, alarmed by its burgeoning elderly population, has already done so. Beijing is concerned that solving one demographic problem has created another: China is now on course to be the first country in the world to “get old before it gets rich.”

Unfortunately, as some European governments are now learning, it is easier for governments to discourage childbirth than to encourage it. Poverty, and its attendant insecurity, appears to be more a cause of overpopulation than an effect. Once children become a net expense, as opposed to additions to the family workforce, people tend to have fewer of them. The Chinese middle class is no exception.

The relaxation of the policy is a good thing, but it is unlikely to save China from the consequences. Getting old seems unavoidable; China should focus on how to get sustainably rich. 

The first time your correspondent experienced the petty authoritarianism of everyday life in China came after just one week in Shanghai. “Dancing is strictly prohibited, by order of the Public Security Bureau,” declared a large sign slapped on the door of a popular bar. The local cops, it seemed, had decided to outlaw harmless fun.

That was back in 2000, but little has changed. So many serious abuses of human rights occur every day in China that it seems churlish to moan about the irritations of living in a country managed by paranoid prudes in bad suits, even if they do have a state-military apparatus at their disposal. Perhaps the only thing more galling than China’s po-faced propagandists are grouchy expatriates who flock to the comfortable, cosmopolitan cities of Beijing and Shanghai, and always have the option of going home if they don’t like it. So please forgive this rant.

But petty irritants matter in a country that wants to project itself as modern and forward-looking, that wants its students and universities to compete globally, and that wants to attract the best brains and companies. In many respects the public sphere has opened up tremendously over the past two decades, but China still remains backward compared to its competitors in Asia.

Here are a few things that foreign executives should know before they close their office at home and move to the world’s new economic superpower.

Any package you receive from abroad will be inspected by the parcel police at customs and its contents removed if they fail to meet China’s high moral or low political standards. Your correspondent once received a message from customs explaining that it had confiscated a bundle of magazines sent from the UK “due to their lascivious content.” They contained photos of a handful of scantily clad models, which proved too racy for the moral censors.

Your favorite websites will be blocked, unless you remember to subscribe to a proxy service or virtual private network (VPN). Even then, YouTube and many other sites may be unwatchable, because routing content through a third country is too slow. And last month, Beijing’s censors finally figured out how to block determined users from accessing one of the most popular paid-for VPNs.

Foreign-based email services will barely function during important political meetings, such as March’s National People’s Congress or October’s Party Congress, when the Propaganda Department scours the web for content deemed threatening to the proceedings. Ditto any period of political strife, whether it be scented with jasmine or Xinjiang mutton.

And you should expect imported copies of foreign newspapers and magazines to arrive with offending articles about China literally ripped out. In March, passengers on flights to Beijing from Hong Kong were required to hand over copies of the (sadly) innocuous South China Morning Post before they left the aircraft, for fear of stirring revolution.

These may appear mere trivial inconveniences, but they breed resentment and suspicion, and show journalists and politicians that China is not a country you can trust. And this petty authoritarianism should matter to any policy maker who wants the country to graduate from foreign plagiarizer to indigenous innovator. China will remain a second-rate economy as long as information flows remain in the grip of the Party’s control freaks.

 

Western Sichuan, by which I mean the western half of the Sichuan basin rather than the vast swathes of mostly mountain territory tagged on to Sichuan province over the past century by various Chinese governments, is a very special part of China. The sense of connection to the past, of continuity with antiquity, of a functioning and healthy web of social and family contacts being intact and alive, is stronger here than in any part of the Chinese countryside through which I have passed. At least, that is my impression, true or not.

The region feels almost blessed in many ways, but only relatively speaking. This is still tough rural territory compared with the richness of, say, Thailand or New England farmland.

Let me start with the terrain. The terraced fields are often intricately interlocked with stone and brick walls, with delightful and perfectly round fishponds sitting in the middle of most of them. The walls and circles have careful, almost artistic, designs that seem to date from long ago, maintained with at least as much care as anywhere else I have seen in China.

The solid and usually traditional farmhouses are well-sited beside the hills, overlooking the fields and surrounded typically by bamboo stands. I saw more old farmhouses in this – to me – magical region west of Nanchong and east of Chengdu than I had seen since the poorest areas of Anhui province. But I sensed that, unlike in Anhui, a key reason why these houses in Sichuan have so far survived with their distinctive Tudor-style walls of rectangle wooden struts is more a result of the fact that the houses were originally well built and so are in less need a replacement. I would say there is also a greater awareness of tradition among these people.

To the east of Nanchong, the houses had all been painted by the local authorities with fake black and red lines to make them look from a distance as if they were traditional Sichuan houses. Here, the lines were real. Even the more modern brick and concrete farmhouses that I passed had a style about them that reflected the older structures, with slanted tiled roofs rather than flat concrete slabs, and white walls and yellow doors – but all different, and clearly not demanded by local officials. It was a pleasure to look at them.

One change for the better in this region in recent decades is afforestation. The hills above me were all well-covered in trees, and several people commented on how 20 or 30 years ago they had all been barren. One man told me that officials assigned areas of the hills to each farmer, and then gave money in return for them planting and caring for the trees. A smart idea.

“It is really important to have more trees because the environment in China is deteriorating so fast,” said the man. I am always interested to see how far the awareness of these issues is spreading even at the most basic levels of Chinese society. This awareness has implications right up the line through the years ahead.

Another way in which the region is blessed is the climate, which is often mild and pleasant when other parts of the country are suffering from extremes of cold or heat. This part of Sichuan province feels protected particularly from the bitterness of winter in a way that rural Anhui and Hubei are not. There was still plenty of green around in February, and while the paddy fields were asleep and brown, there was no shortage of signs of life. The ducks were happily cruising through the waters between the burnt rice stalks, snuffling up goodness from the muck, and from the bamboo stands beside the farmhouses I could often hear the satisfied cooing of doves or pigeons. People here wear five or six – or more – layers of clothing as a matter of course, but I was perfectly comfortable with just one sweater.

Then there is the lifestyle, which, after the work is done, is dominated by tea and games. People in this part of China, and certainly in the Chengdu region, love their tea, and I detected a relatively high awareness of the difference between good and bad tea. In front of one very ordinary and poor farmhouse, I was given some Iron Buddha tea from Fujian, which was delicious.

Meanwhile, alcohol consumption in Sichuan is allegedly relatively low. There were certainly far fewer advertisements along the road for alcohol brands than usual.

As to games, the people of this part of Sichuan all seem to play mahjong and cards all the time. The little villages all have open-fronted teahouses filled with square wooden tables, four persons to a table, usually playing mahjong.

Why the extreme interest in this game? I asked.

“It has to do with history,” said one man, home from Shenzhen for the holidays and clearly very happy to be back communing with his roots.

“Sichuan province has always been relatively peaceful, and the weather is generally good,” he said. “It is easy to grow rice, corn and other crops, so it is not difficult for people here to lead a pretty comfortable life. That means there is plenty of time to do other things and so people play mahjong.”

I asked about the rules of the game used by the people in this region. As far as I know, Shanghai and Hong Kong people these days mostly use what are known as “Taiwan rules.” But in Sichuan, I was told, they use a variety of rules, often changing to another playing method during the same session.

“Basically every place has its own rules,” said one young man, a recent graduate from a university in Chong­qing, who was here visiting relatives. “There are Nanchong rules and Chengdu rules and Chongqing rules.”

As in the rest of China, they play mostly with friends and family for small amounts of money, with the days passing by in what looked to be a delightfully social way.

Then there is the food and the water. I had a couple of meals with local people in their houses – or rather in the courtyards outside – and the quality of the food ingredients was obvious.

“The pigs and chickens here are so tasty because they are fed naturally,” said one guy. “The meat in Shenzhen is just terrible by comparison. “In the end, I will move back here for the food.”

I spent time with one family drinking tea, and the water I was told came from their own private well.

“The water is clean and you can drink it without even boiling it,” said the farmer. “In the summer, the water from the well is cool and in the winter it is warm.
With water outside (in other parts of China), there is no way of knowing what is in it.”

But there is, of course, at least one problem in this quiet rural corner of Sichuan province, as described by one migrant worker, who used the international sign language of rubbing his thumb and index finger together.

“The quality of life here is very good but there is no way to make money,” he said. “But I much prefer to be here,” he added. “My plan is to work in Shenzhen for another 10 years or so, and then come back to the village and build a house for myself and take it easy. Maybe spend RMB100,000 (US$15,220) or so on the house – that would be enough.”

The China Reading Project donates books to schools in rural China. Donations are tax-deductible. Payments can be remitted to The China Reading Project, Xinhua Finance Library Foundation Limited, HSBC Hong Kong account 809-215064-838, SWIFT code: HSBCHKHHHKH, HSBC Causeway Bay Branch. Visit http://www.chinareadingproject.com for details. For more Travels articles, visit http://www.chinaeconomicreview.com/travels.

Graham’s book, The Great Walk of China, can be purchased from Blacksmith Books and at all good bookshops.