Discontent grows on China's farms: Teresa Poole visits a model village that could hold the key to rural prosperity

LIONHILL VILLAGE is the sort of rural community that China likes to show off to visitors. All its 325 households have electricity and televisions, 30 of which are colour sets. Five homes have video recorders and one even has a private telephone. Incomes are comfortably above the national average for farmers, boosted by the profits from the village factory production of sewerage piping, paper boxes and electrical insulators.

This particular day, it was cold and rainy, so the village head received his guests in one of the village's large two-storey buildings, his audience augmented by more than a dozen village officials who had come to watch him hold court. Behind him, on the wall, hung a painting, with the village's 'honesty policy':

'When doing business, be quick and efficient,

When speaking, be brave,

When business is finished, say thanks,

When invited to have dinner, you should refuse.'

Lionhill village, about an hour and a half's drive from Wuhan, in central Hubei province, did not have any complaints. Business is doing well. It's not clear how the village headman knew, but he asserted that there was a total of 1.5m yuan (pounds 167,000) in villagers' individual bank accounts. One in 10 village families was worth more than 100,000 yuan (pounds 11,100), he said. Shu Tianxun, 33, for instance, had built a nine-room house for his wife and two children, and ran a business in which he bought materials and transported them in his truck.

There is, however, a different picture in many of China's rural areas. It was not villages like Lionhill that China's Prime Minister, Li Peng, was talking about at the recent National People's Congress when he said the countryside had 'quite a few problems that cannot be ignored'. In other parts of China, many of the country's 900 million farmers are increasingly discontented. And central government has recently woken up to the need to do something to stop discontent breeding instability.

The official media have reported numerous examples of peasant unrest. In Sichuan province earlier this year, angry farmers attacked rural postal offices when they would not cash money orders. There have been peasant demonstrations in the provinces of Heilongjiang, Jilin and Anhui. The nub of complaints is that the peasants have once again fallen to the bottom of the economic pecking order.

During the first half of the Eighties, farmers were the first to benefit from economic reforms when they were given responsibility for their land plots and allowed to sell produce on the free market. Nowadays, as Mr Li said, 'the gap between the prices of industrial and agricultural products has widened, the peasants' incomes have risen only slowly and their financial burden has been too heavy'.

Out in the heart of the countryside, many peasants are scraping a living from the soil while they see or hear of China's new entrepreneurs getting rich quick.

The farmers are being hit from both sides. Their two main complaints over recent months are the uncashed IOUs (known as 'white slips') that they receive when the state buys its grain quota. On top of this are the excessive charges and taxes imposed on the farmers, usually by local governments which need to raise revenue to jump quickly on the bandwagon of entrepreneurial economic reform.

Earlier this year, the nine main grain-producing provinces owed farmers 2.75bn yuan (pounds 300m) in unpaid IOUs.

The problem of local taxes was highlighted with widespread reports last winter of a peasant woman in Hunan province who killed herself because she could not pay the new fees. Official estimates are that nearly one quarter of peasants' incomes are eaten up by taxes, which cover anything from irrigation works and road building to the use of tractors.

Wary of rural discontent, central government launched a well-publicised campaign to reassure the farmers something was being done about their situation. IOUs were all supposed to be paid up by Chinese New Year. 'Unfair fines and levies on farmers must be stopped' said one China Daily headline. 'Governments at all levels are expected to address these problems,' said Mr Li.

In March, the Communist Party and the State Council issued an order limiting to 5 per cent the amount of fees that can be charged by a village or township on its farmers, but policing this will be near impossible.

Central government has reason to be concerned. In the 1989 pro-democracy movement, there was support from peasants who had suffered greatly from raging inflation and static earnings. And there is already a 'floating population', estimated at more than 90 million rural workers, who have left their land in search of better economic prospects. At the same time, industry is eating up fertile land near cities and acreage under grain production is falling just at a time when domestic demand is set to rise.

The inequality in earnings is now huge: the urban average wage was 1,800 yuan last year (pounds 200), plus perks. The rural figure was 780 yuan (pounds 87). Since the mid-Eighties, allowing for inflation, rural incomes have done little better than remain stagnant.

(Photograph omitted)