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Page last updated at 15:50 GMT, Wednesday, 11 March 2009

Can rural consumers save China's economy?

Watch the film

Quentin Sommerville | Beijing Correspondent | BBC News
By Quentin Sommerville
BBC News, Chongqing, south western China

In Shizi village, a big box of modernity arrives on the back of a motorbike.

The villagers are getting used to seeing the deliveryman.

Today he is delivering a washing machine to He Zhizhong, a farmer.

It is Mr He's very first washing machine.

"I bought it because we get a subsidy from the government," says Mr He.

"Our kids asked for one, to lighten their mums' workload. She spends an hour washing clothes every couple of days. Now that we've bought the washing machine, she can do other housework, or have a rest."

Economic stimulus

The government is offering farmers a 13% discount on a whole range of consumer goods.

The little parcels that dotted the landscape for generations have been knitted together... the peasant farmers have been turned into landlords

It is part of a stimulus package to boost demand in the countryside, and help keep China's economy ticking along.

Westerners are not buying so many Chinese made goods these days; exports have collapsed, and that has tamed China's extraordinary economic growth.

But if farmers can be encouraged to buy, then the country's factories can keep producing.

In turn, suppliers are kept busy and workers stay employed.

Privatisation scheme

And there are more fundamental changes happening in China's rural economy.

Huang Kaiwen
Leasing land has benefitted peasant farmers like Huang Kaiwen

In Dian Jiang county an experiment is taking place. The land has, in effect, been privatised.

The farmers have been allowed to lease their land to a company.

The little parcels that dotted the landscape for generations have been knitted together, and in an instant, the peasant farmers have been turned into landlords.

Huang Kaiwen rents out his own land, and earns a wage working in his neighbour's fields.

"Before we didn't earn much but since the company arrived we have more money," he says. "They came in 2000 and leased our land. It has all benefited peasant farmers."

It is a revolutionary decision. Previously land could only be traded or leased by the government: now it is in the hands of the farmers.

The government plans to extend the scheme across China.

No safety net

Beijing is also looking to building a social security system, and improving healthcare as a way of getting people spending.

Zou Simao
Zou Simao could not pay for a bone marrow transplant for his son

Zou Simao lives with his family in a single room of a communal farm house in Lingshui County.

It is a desperate existence. He can grow only enough to feed his family, there is no money for meat, and no money for health insurance.

When his son, Zou Yong, became sick with a rare blood disorder, he did not have the money to pay for a bone marrow transplant.

So Mr Zou did the unthinkable and abandoned his son at a city hospital.

"At the time we were at the hospital in Chongqing and I said to him, I have spent pretty much all of the money I borrowed, I have to go home", he says.

For millions of peasant farmers there is no safety net.

For the poor, getting sick is often a death sentence.


But Zou Yong did not die.

White Horse Village
White Horse village
Newsnight's series charting the urbanisation of rural China

A charitable stranger, He Peiqiang, took him in, and started to care for him.

"If I didn't take him in, I am sure he would have died. Even though I don't make much, I thought that with hard work I could get him treated. But I didn't realize that the medicine would be so expensive," says He Peiqiang.

For rich and poor in China, healthcare has become incredibly expensive.

So, the government is promising to build thousands of new clinics and to create a national health insurance scheme.

Stephen Green, chief economist with Standard Chartered Bank, says it is vitally important.

"If you're a farmer and you join that system, you can basically see the doctor for free. The only problem is though if you need an operation the system may only cover 10 or 15% of the cost," he said.

Mass unemployment

The government is trying to turn back a flood. But reforms of the countryside may have come too late.

Map of China showing Chongqing

China's prime minister says that the country's employment prospects are extremely grim.

Already, some 20 million farmers turned factory workers have lost their jobs. Millions more will be joining them.

The message to migrant workers is to leave the cities, and head back to the fields. Life in the countryside is improving, says Beijing.

Focusing on the countryside is not just a matter of economics.

Leaving millions of men and women unemployed, broke and restless, crammed into China's cities is a risk that the communist party, just cannot afford to take.

The previous decade in China was all about the city.

It was the place to go, to get rich first. For millions that proved irresistible.

But after years of being promised so much, who would want to return to a life of struggle back on the land?

Watch Quentin Sommerville's film on Newsnight on Wednesday, 11 March, 2009 at 10.30pm on BBC 2, or after the broadcast on the BBC iPlayer.

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