Chapter Nineteen: Why Is the Countryside So Poor?

In the late 1980s and early 1990s, rural China was shockingly poor.

If you hadn't seen it with your own eyes, it would be hard to comprehend the kind of pain that seeped into one's very bones.

Before getting married, men and women often had never worn a single new piece of clothing.

In families with many children, older siblings would pass their clothes down to the younger ones, who in turn would pass them on to cousins, as if these garments were priceless treasures. A single article of clothing would be worn by more than a dozen people, handed down again and again.

Many middle-aged and elderly people at the time would wear the same clothes for over half a month without washing them, simply because they feared that frequent washing would wear the fabric thin.

As the old saying went, "Three years new, three years old, patched and mended for another three years."

...

Walking along the narrow village paths, all one could see were dilapidated mud houses.

Every time it rained, every household would rush to set out every available vessel to catch the leaking water, lest the rain erode too much mud from the walls and hasten their collapse.

In the late 1980s and early 1990s, China was energetically pursuing urbanization, striving to catch up with the developed Western countries. Yet, at the same time, rural construction was regressing.

The countryside was desperately poor, but why was it so impoverished?

There was reason for this rural poverty.

From the implementation of the household responsibility system in 1978 until the mid-1980s, rural development had achieved remarkable results.

Years of bumper harvests led to rapidly rising living standards for farmers, and their spirits underwent a dramatic transformation.

In the late 1980s, the government encouraged farmers to raise funds and establish grain and oil processing plants, and the rural population responded enthusiastically.

But in the 1990s, national policy towards rural areas shifted decisively. Soon after, official documents were issued prohibiting farmers from pooling resources to set up grain processing plants.

A wave of village- and township-run enterprises collapsed, with farmers' initial investments confiscated outright. Many farmers were saddled with crushing debts, and countless workers at these enterprises were laid off.

The collapse of these rural enterprises only accelerated the breakdown of the rural economy. Government revenues at the township and county levels plummeted, grain levies soared, and a new era of heavy exactions and multiple levies was ushered in.

The integrated "pig-raising" production chain painstakingly built up by farmers over more than a decade was destroyed overnight by the policy of designated slaughterhouses, plunging the rural economy into even greater distress.

The return of the supply and marketing cooperatives' monopoly over seeds, pesticides, and fertilizers only further threw rural economies into chaos.

A series of misguided national policies toward rural construction nearly brought the rural economy to its knees.

In stark contrast stood the booming urbanization of the cities.

Compared to the farmers who were living through hell in the countryside, city dwellers at that time seemed to inhabit paradise.

In most people's minds, the contribution of rural farmers to China's urbanization was limited to the migrant laborers who toiled on urban construction sites.

But that was not the whole story.

Rural farmers made an indelible contribution to the rapid development of the coastal provinces and the cities along the Yangtze River economic belt.

From the late 1980s onward, government investment in rural areas steadily declined, and inland provinces were required to raise their own funds at the county and township levels, with decreasing allocations from above.

At the same time, the state extracted large amounts of agricultural taxes and various levies from rural regions every year, funneling them to the eastern coastal provinces and the Yangtze River economic belt. It was only with these funds that the government could offer the array of preferential policies granted to these regions.

It was the steady stream of agricultural tax revenue that gave the government the confidence to promise "three years tax-free, five years at half tax" to foreign-funded, joint-venture, and certain high-tech enterprises.

With ample funding and special policies, the eastern coastal provinces dramatically upgraded their urban infrastructure and transportation, building nests for golden phoenixes to alight.

China had missed the first and second industrial revolutions, but seized the tail end of the deindustrialization wave in the developed West, using it as a springboard for its own industrialization and urbanization.

In fact, China was not the only country to benefit from the West's deindustrialization bonanza; Indonesia, Thailand, Vietnam, Brunei, Malaysia, and the Philippines were all competitors.

But compared to them, China had the vast countryside as its backup, with nine hundred million farmers providing a lifeblood for the rise of the cities.

China's immense land and market inevitably imbued it with greater economic potential, resilience, and room for maneuver.

This was a major reason why China was able to recover so quickly from the Asian financial crisis of 1997.

It was only around this time that China's leaders realized the rural economy was already in a state of chaos.

Yet awareness did not translate into immediate change.

The Asian financial crisis wreaked havoc, and China's economic strength did not emerge unscathed.

Countless small and medium-sized export-oriented enterprises faced a harsh winter and went out of business, while some large enterprises began transitioning from export to domestic sales.

Prices of various industrial goods fell, profit margins shrank, and even state-owned enterprises suffered. Many were forced to undergo restructuring.

The central government recognized the issues plaguing the countryside, but had no solution. By then, China's industrialization and urbanization could only move forward, not backward.

Only by maintaining a stable urban base could urbanization have a future. Thus, the countryside had to continue bleeding for the cities.

It was not until 2004, when the state officially issued the notice on the "Village Access Project" pilot in certain provinces—the "Every Village Connected" initiative—that the rural economy began to gradually improve.

It was only after January 1, 2006, when the complete abolition of the agricultural tax was enacted into law, that the rural economy slowly regained its vitality and began to prosper again.

But this rural revival did not last long before facing another setback.

When the 2008 financial crisis struck, the government's four-trillion-yuan stimulus plan was launched, and funds originally allocated for rural revitalization were diverted once again.

Under the guiding principle of "supporting the large and letting go of the small," small and medium-sized enterprises were left to fend for themselves, while large enterprises received tax breaks and substantial subsidies, weathered the economic storm, and set off on a path of rapid development.

Lu Kun was born and raised in the countryside, and so could truly understand the pain and sorrow of rural folk.

The poverty and backwardness of the countryside was not due to the low quality, ignorance, or lack of education among farmers, nor to poor natural conditions. One should not blame the farmers themselves for rural poverty.

Rather, the impoverishment of the rural population was closely tied to government, to the system, to the mainstream population, and to the irrational design of mainstream society as a whole.

Lu Kun understood that if he did not manage to escape the trap of the rural world, he would become just one more among those nine hundred million farmers whose lives were marked by suffering and tears.

...

"Fly, fly out of these mountain valleys. When I return in the future, I shall have transformed from a swallow cloaked in jet-black feathers into a fiery red phoenix..." Lu Kun murmured with a smile at the corner of his lips.