The market: winners and losers

Its a story as old as capitalism itself. When industry begins, peasants leave the land for work in the factories.

The industrial revolution which is currently sweeping China is much like those which swept this country two hundred years ago. Two thirds of its population live on the land - with an average income less than a dollar a day.

In the second of a series of films Paul Mason found out what's driving farmers off the land - and what happens to them in cities where they are still treated as second class citizens.

PAUL MASON:
"Peasants get dressed by the light of moon and stars", says the Chinese proverb. It says nothing about a 60 watt bulb but when you're picking pak choi at 4am, you don't stand on tradition. The market opens at five and you have to be early to claim a spot. Green veg sells for the equivalent of 5p a kilo, and as everybody else seems to be selling it, it's a buyer's market. But at least it is a market. For these peasants in Guangdong Province, China, the scene would have been unthinkable 25 years ago. The whole village worked together on the land and the food was just handed over to the government.

This man farms a landscape that's been shaped by market reforms. In 1979, the land was divided up into household units and most ended up with smallholdings like this. His plot is less then half an acre. There are suburban semis in Britain with bigger lawns. Good weather brings three harvests a year, so he can support his family, just. What's left after that, he says, is not worth counting. Two-thirds of the Chinese population live on the land and, despite the market reforms, the vast majority are as poor or poorer than this.

Over the past 50 years, the land has been given to the peasants, then collectivized, then decollectivized then finally turned over to market forces. In the first phase of market reform, the villagers were the great drivers of China's economic growth, but in the 1990s, it all went wrong. Now all the money is going to the cities. While rural incomes are rising, they're not rising fast enough. In 1990, people in the cities earned twice as much as those on the land. Today, urban incomes are on average more than three times as much as those in the countryside.

When rural societies go capitalist, there are always winners and losers. Chen Chao is one of the winners. He used to be a fisherman, now he's a fish farmer and doing nicely.

CHEN CHAO:
FISH FARMER:
Economic reform brought great changes to our lives. Before we couldn't afford two meals a day, now we can have four. Before I had a wooden boat, now I have a motor boat. I have four children in school, which costs a lot. Now I have a new house and a car. The difference is massive.

PAUL MASON:
It doesn't look much, but the real riches are in the fish pens. Each one of these dragon fish is worth y1000, a month's wages for a factory worker. He has 90 of them in each pen. They will mainly end up in the restaurants that have sprung up in China's towns and cities. With all this, Mr Chen can afford to pay three labourers to do the heavy stuff. Under Chairman Mao, people like Chen Chao would have been seen as a black category, naturally suspect elements. Now they're seen as role models. For productivity in the countryside to grow, you need more intensive methods. For those that can't adopt them, poverty is simply driving them away.

FAN GANG:
GOVERNMENT ECONOMIC ADVISER (TRANSLATION):
People always say, well, rural people, consumption of the rural people cannot grow very fast, well, the reason, because their income cannot grow fast. The reason their income cannot grow fast, because agriculture is no longer the source of income gross. If you want to increase their income, you have to provide more jobs. Land farming jobs for the rural people, but that will take time.

PAUL MASON:
For 150 million people, there wasn't time enough. They've left the farms to look for work in the cities. There are more migrant workers on the move in China than the whole workforce of Western Europe. The registration system, which used to stop people moving from their home village, has been relaxed, but once you've moved you are a second-class citizen. You need official documents for everything - housing, education, and healthcare. So everywhere you see the same graffiti - "Phone this number for fake papers."

In the factories conditions vary. At this factory, standards are on a par with Europe. The boss is proud of the fact that he pays 30% more than the going rate. They still only earn the equivalent of £100 a month and, like many migrant workers, live a life of strict work discipline. They live in dormitories, eat in the company canteen, but they seem glad to be somewhere like this.

At the other end of the scale, it's very different. According to the Chinese Government, 145 million migrants are working without fixed hours or conditions. Only one in seven earns more than y500 a month. That is £40. Only one in ten has ever signed a contract with their employer.

For some, the dream of a better life turns to ashes. In the factories of Shenzhen alone, 30 workers a day are involved in serious accidents. We were able to speak to some of them, but only without the permission of our Chinese minders, and at a secret location. Cao Xian Yi was loading cotton into a mattress machine.

CAO XIAN YI:
MIGRANT WORKER (TRANSLATION):
There were only 12 skilled workers left, all the others were new recruits. Some of them didn't know anything about the job. I was inside the front of a machine and at the back someone turned on the electricity.

PAUL MASON:
Yuan Yun Zu was making electronic circuits when the machine fell on him.

YUAN YUN ZU MIGRANT WORKER (TRANSLATION):
It's hard enough for a healthy person to find a job. How do you think it is for a disabled person in the countryside? I can't do farm work any more, and if you open a shop in the countryside, it's hard to survive, as the economy is very bad.

PAUL MASON:
Li Qi Bing had been working for 12 hours without a break, making plastic flowers, when his machine went wrong.

LI QI BING:
MIGRANT WORKER (TRANSLATION):
The factory hadn't bought insurance for us. We took the factory to the low courts, but they refused to hear the case. We had to go to the Labour Bureau for arbitration, but the Labour Bureau refused. We were kicked like a football all over the place. Nobody looked after us.

PAUL MASON:
Compensation ranged from minimal to zero. Each of them was sacked. The men turned to Zhou Litai, an employment lawyer who's become a scourge to the Shenzhen authorities. He has fought hundreds of industrial injury cases, and says that the same list of problems comes up every time.

ZHOU LITAI:
LAWYER (TRANSLATION):
First, old equipment. Second, the workers don't get training. Third, they're exhausted because of long overtime. Finally, lack of government regulation. In the labour market, supply is bigger than demand. It's much easier to attract workers here than it is to attract employers. The local government is keen to develop the local economy. As long as they keep the employers happy and they continue to invest, they don't care about the benefits of the workers at all.

PAUL MASON:
Zhou Litai's licence to practise law has been revoked in Shenzhen. He says there is enough good law to protect the workforce, but neither the local government nor the official trade union, the ACFTU, bothers to implement it.

ZHOU LITAI:
We need to make it clear that the Chinese workers' union behaves like a part of the government, not a union. It's a different system than in Western countries. The union's money comes partly from government, partly from the employers. That's why they can't protect their rights. On top of that, even an ACFTU official is still an employer of the company, and if he does something wrong he'll be sacked.

PAUL MASON:
In parts of China it's gone beyond legal action. In the industrial heartlands, where access for journalists is restricted, there are protests on a daily basis. Factory closures, land grabs and unpaid wages are the main grievances. The men who organised this protest last year are serving seven years in a penal colony.

Han Dong Feng led the autonomous workers union that marched to Tiananmen Square in 1989. After the crackdown, he was number one on the wanted list and spent 22 months in prison. Banned from mainland China, he monitors the unrest from Hong Kong.

HAN DONG FENG:
CHINA LABOUR BULLETIN:
What you can see is the difference between the current demonstration and in 1989, the workers need the students to push them to go to the street to support the students. Today there is not any students to blow the fire, to tell the workers you should go to the street and they go on their own. The reason is...whatever, you cannot survive any more, you know what kind of waves you can make, should make. At least before you die, you make some sounds. That's why the bulletin is trying to interfere in those cases, trying to give people legal advice and lead people into the lawsuit and the courtroom other than let them go to another revolution.

PAUL MASON:
Poverty on the land, unemployment in the rust belt, and low wages in the cities are all things that trouble China's government too. So far, growth has been driven by state spending and foreign investment. Now the government wants domestic consumption to take the strain. There's already a thriving consumer market for the urban middle-class, but to introduce the masses to the world of bar codes and retail therapy, you have to put money in their pockets.

FAN GANG:
Think of the potential. If China continued to grow and all those people can come to industries in the cities and increase their income, you can think of how the potential market could be. The turnover market is big, but it's still only one third of the population enjoying this growth. It's still another two-thirds that are coming. So you can think of how the potential could be.

PAUL MASON:
Officially, this school does not exist. The grass was head-high at this paint factory before volunteers turned it into an unofficial school for 1,000 migrant children. There are 60 staff. Many of them are migrants, too. This girl's parents came from Inner Mongolia. Away from their home village with no permanent status in Beijing, they have no rights to education unless they pay over the odds, but they are among the city's poorest people, so she comes here. The fees are y300 a term, about a third of the cost of a state school. There are 200 schools like this in the capital. The city council won't give them legal recognition and has been trying to close them down. The migrants built this community up from nothing. Wang gets looked after by an extended network of aunts and uncles. To the people of this district, the school is their pride and joy.

WANG XIU LING:
AUNT (TRANSLATION):
In my hometown, the way you live is dependent on the weather. In a whole year we only earn y1000, but we don't have so many living expenses. We eat what we plant. In Beiijing, living conditions are much better. You can buy whatever you want. You can't do that at home.

PAUL MASON:
The school was set up nine years ago in a field. Many of the parents are construction workers who have come to build the new Beiijing. Despite the hardships, they have high hopes.

LI SU MEI:
XING ZHI MIGRANT SCHOOL (TRANSLATION):
The parents want their children to be better off than they were. They want them to realise all their own unfulfilled dreams. They don't just want them living in poverty, or having to do manual work for a living. They want them to make more of a contribution to the country and the family.

PAUL MASON:
For now, these children are locked out of mainstream education, but in one sense what their parents dream for them is also China's dream. Because if 900 million peasants could be brought into China's growing mass consumer economy, China becomes not just the workshop of the world, but the engine of the world, and the whole balance of power in the global economy tilts to Asia and to them. For China to complete its transition, millions more will have to live through what this community has lived through - mass movement in the cities with all of its hardships.

When it's over, China will be a different place, a modern economy fuelled not by other people's money, but their own. A self-sustaining superpower to eclipse Europe and to rival America. For all of this to happen without social and political chaos depends on China's next few moves.

This transcript was produced from the teletext subtitles that are generated live for Newsnight. It has been checked against the programme as broadcast, however Newsnight can accept no responsibility for any factual inaccuracies. We will be happy to correct serious errors.