The Fragile Middle: China’s migrant workers test urbanisation drive; One in five Chinese only a wage away from losing middle-class status

April 14, 2014 4:04 pm

The Fragile Middle: China’s migrant workers test urbanisation drive

By Jamil Anderlini in Beijing

Xu Bo has worked in a construction gang in Beijing for four years, helping build the city apartments and skyscrapers that symbolise China’s urban transformation.

But when asked if he plans to settle permanently in the Chinese capital, his response is emphatic: “I have absolutely no intention of staying in Beijing – that is a crazy daydream. It is way too expensive.

“No matter how much money I earn, whether it is Rmb4,000 or Rmb5,000 ($640-$800) a month, eventually I will go back home.”

Mr Xu may not fit the western idea of “middle class”, but in the Chinese context he and 270m migrant workers like him are part of a new category of upwardly mobile consumers.

As a group in transition from subsistence farming to city living, these migrants occupy the middle ground between the wealthy urbanites that cluster around the Chinese coastline and the mass of peasant farmers in the hinterland.

The itinerant group makes up nearly a fifth of the Chinese population and, with average wages of about $14 a day, they are at the upper end of middle-class incomes in emerging markets. The Asian Development Bank’s parameters for the continent’s middle class is those earning $2-$20 a day.

But as Mr Xu makes clear, the tide of urbanisation that raised many of this group out of rural poverty does not just flow in one direction.

Thanks to outdated government policies that deny many urban migrants access to basic services, slowing economic growth and increasingly cramped and unpleasant living conditions, many migrants view their lives in the big cities as temporary.

Government figures to be published on Wednesday are expected to show growth slowed from 7.7 per cent in the fourth quarter last year to about 7.3 per cent in the first quarter of 2014. That would be the slowest rate of expansion in China since 1990, when the country was still under international sanctions in the wake of the Tiananmen Square massacre.

Such a slowdown makes China’s urbanisation a partly reversible phenomenon.

Less than 54 per cent of China’s 1.36bn population lives in a city, compared with an average of 80 per cent in developed countries and 60 per cent in developing countries with similar per capita incomes to China. As recently as 1980, less than 20 per cent of the population lived in cities.

However, these numbers are distorted by China’s Mao-era household registration system. Under the “hukou” system, as it is known, the government only counts 35.7 per cent of the population as genuine urban dwellers who qualify for welfare benefits such as education and healthcare in the cities.

This makes for a precarious existence for rural migrants and means nearly 20 per cent of China’s population could be only a week’s or a month’s wage away from losing their recently acquired status as aspiring middle-class urbanites.

That is what happened during the 2008-2009 financial crisis as demand for Chinese exports collapsed and factories closed. By April 2009, the government estimated that about 25m rural migrants had given up looking for work in the cities after losing their jobs and headed home to the countryside.

Tom Miller, author of China’s Urban Billion, notes that while China’s leaders talk at length about creating a system “that no longer treats migrant workers as second-class citizens . . . hukou still prevents hundreds of millions of migrants from building permanent lives in the city”.

Another deterrent to permanent relocation is the fact that migrants cannot sell farmland back in their villages because all land ultimately belongs to the state. This provides the ultimate safety net because if all else fails they can always go home and grow enough food to eat. But it also ties them to their farms and villages.

In the past month, Beijing has outlined a 10-year plan to grant urban hukou to 100m migrant workers, rebuild slum housing in cities for 100m people and “guide the urbanisation” of 100m more peasant farmers into smaller cities in the west and central regions of China.

This grand programme is partly aimed at propping up the slowing economy with massive investment in housing, infrastructure and transport networks.

But it also shows a recognition of the growing importance of China’s migrant class. Guo Haiyan, an analyst at investment bank CICC, notes how they have emerged as a powerful consumer group. “Just five years ago, migrant workers were most concerned about the essentials. But there’s been a huge change. Now the spending priorities are like that of the wider middle class – they want to spend money on houses, cars and tourism,” he says.

Thus the dilemma facing China’s government is how to keep raising living standards for these migrants and eventually to integrate them permanently into the cities.

China’s leaders estimate they need to create at least 10m new urban jobs each year just to maintain social stability and head off dangerous demands for political change. Yet this will only add to pressures on already stretched cities such as Beijing, where for the past 12 years an average of 430,000 people a year have relocated.

Liu Lingfei, 27, originally from northern Hebei province, has lived in Beijing for three years. While her parents are peasant farmers, she has a university degree and works as an accountant for a Beijing pizza delivery company.

She is part of a younger generation of migrant workers who, having grown up in households that already had some money, are far less willing than their predecessors to “eat bitterness” doing dirty and dangerous jobs in the big cities. At the same time, she and others like her are increasingly unwilling to return to their homes to toil in the fields.

“There is no way I could go back and be a peasant in my home town,” the 27-year old says. “I studied accounting and finance – if I went back I would not have a clue about which crops to plant in which season.”

Yet without a more drastic overhaul of the rural land use and urban hukou systems, many migrants could be faced with no choice if the Chinese economy falters. In that case they may find themselves not only out of a job, but also shut off from the middle-class lifestyles they have come to expect.