China's Trapped Transition_ The Limits of Developmental Autocracy - Minxin Pei [117]
The official magazine Banyuetan (internal edition) provides another vivid but disturbing account of conditions in Liuzhai village in Lingquan county, Anhui province.
The tensions between the village residents and township cadres were so high in the mid-1990s that for three years township and village officials did not dare to enter the village. As a result, no taxes or fees were collected. The family planning policy was not enforced ... Whoever came forward to be the village official or cooperated with the government would have his crops destroyed and farm animals poisoned. Even though the authorities had sent six different work teams to the village, they could not form a village government. For five years, the village had no party cell, no village committee, and no leaders.142
Worried about growing rural unrest, the Chinese government has attempted several remedial measures, the most important of which was the substitution of fees with taxes (feigaishui). But the initial results from the areas where the reform was tested were mixed. In a pilot program in Jingshan county in Hubei, this reform resulted in reduction of peasant burdens by 40 percent.143 However, the feigaishui reform alone did not address the most critical issue behind high peasant burdens—a bloated rural bureaucracy. Without a drastic reduction in the size of the township government, feigaishui could provide only temporary relief. For example, in a township in Jingshan county, after the reform was implemented, tax revenue from agriculture totaled 4.7 million yuan a year, but the township government had 730 people on its payroll at a cost of 4.6 million yuan a year. This meant that the township government would have to extract additional revenue from peasants if it wanted to perform the most basic administrative functions and deliver local services.144 Indeed, Ray Yep’s study of the feigaishui reform concludes that replacing fees with taxes alone is unlikely to reduce rural tensions.145
Yet, in 2003, the Chinese government decided to implement the feigaishui reform nationwide, without any accompanying political reforms designed to reduce the size of the rural government. But even if the reform is fully and successfully implemented, its impact on reducing peasant burdens might be modest. It is estimated that 40 billion yuan, about a third of the fees levied on peasants, would be reduced as a result of the reform. This would be an overall reduction of 20 percent of “overt” peasant burdens (legally imposed taxes and fees). On a per capita basis, each rural resident would get to keep an extra 50 yuan a year, roughly about 2 percent of per capita rural net income.146
The Unemployment Challenge
Urban residents are, by comparison, far more privileged than their rural counterparts. During the reform era, their standard of living has also increased dramatically. Generally, polling data indicate that a large majority of China’s urban residents are relatively satisfied with their lives and think China is stable at the beginning of the twenty-first century.147 Yet, behind the polls was a more complex, if not disquieting, picture.
According to tracking polls conducted by Horizon Research, a respected private market research firm based in Beijing, the proportion of urban residents expressing satisfaction with their lives has been steadily decreasing since the late 1990s, while that of those expressing discontent has been rising. A Horizon poll conducted in ten cities at the end of 1997 showed that 80 percent were satisfied and only 19 percent were dissatisfied. Another Horizon poll of 5,673 residents in eleven cities in November 1998 found 70 percent were satisfied and 27 percent dissatisfied. 148 Horizon’s poll of 3,502 people in 2000 reported that 55 percent of the urban residents expressed satisfaction with their lives, and about 27 percent expressed dissatisfaction. The firm’s poll of 4,728 urban residents