`New poor' leave Chinese with an economic puzzle

Older workers at rundown state factories are left out of the new good l ife, reports Teresa Poole in Peking

When China's economy took off, stories were rife of the country's "new rich" - successful entrepreneurs grown wealthy under market reforms. With inflation now described by government officials as "a most acute problem", cities are home to a diffe rent social phenomenon: the urban "new poor".

A survey this month showed nearly 12 million city dwellers are living below the poverty line. In Peking "absolute poverty" was defined as living on an income of less than 143 yuan (£11) a month, less than a quarter of the official average. The report said two-thirds of poor families' dietary levels were "unsatisfactory and some even suffered from malnutrition".

These "new poor" are not the floating rural workers who come into the cities in search of jobs. They are found instead among official urban residents, and are mostly employees in moribund state enterprises and elderly people on fixed pensions. Their lives are far removed from the private entrepreneurs who, according to recent statistics from the State Planning Commission, can earn more than 7,500 yuan a month. Even a taxi driver can make more than 2,000 yuan. The fear of the government is that the widening gap between rich and poor is fast undermining social stability.

In a throw-back to the old days of socialist welfare, some provincial governments are introducing benefits for the really poor. In October in Chongqing, in the western province of Sichuan, officials started distributing grain coupons to lower-paid workers in loss-making state industries. Central Hubei province is issuing grain discount cards to poor urban residents so they can buy staple crops below market price. In the north-east city of Harbin, the government is distributing "special difficulty cards"

to exempt the poorest from certain fees and taxes.

The government regularly claims inflation - running at 27 per cent - is not causing hardship for those with jobs because wages, on average, are rising even faster. But millions work for loss-making state enterprises. When production slows, or grinds to ahalt, employees are often sent home "to rest" on reduced salaries, and can even find themselves paid with unsold factory products.

This practice is becoming far more prevalent. In Peking, according to the Municipal Labour Bureau, in the whole of 1993 there were 35 labour disputes provoked by enterprises deducting or failing to pay wages. In the first half of 1994, there were 137 such cases.

In practice, official urban poverty numbers are defined by an unrealistically low income threshold. Ms Wang, a full-time clerk in the general office of one of Peking's big knitting and weaving factories, earns 300 yuan a month, twice the threshold level for "absolute poverty", but can barely make ends meet. Her priorities are the traditional four basic necessities: "chai, mi, you, yan" (fuel, rice, oil, salt).

With temperatures well below freezing and snow on the ground, Ms Wang wore a green padded cotton army-style coat and old-fashioned padded cotton booties. In her late thirties, she is married to a machinery tool worker and has one son. She is resigned to the growing wealth gap that has left her and her colleagues behind. "We are helpless. Rich people can be capable," she said. But, she added with some resentment: "They also have lots of guanxi [influential connections]." She did not seem the type to exploit new business opportunities.

The textile industry is suffering particularly badly. At the Yungang factory of the General Company for Knitting and Weaving, situated in Peking's suburbs, the plant has been mothballed and employees sent home "to rest" on 150 yuan a month. Younger staffcan find casual work in new industries or become street hawkers. Older ones, set in their ways as state employees, simply stay at home.

The country's first Labour Law, a result of fears of unrest in the workforce, takes effect on 1 January, introducing, among other things, a "minimum wage". In Peking, this has been set at 210 yuan a month. Critics complain that is much less than any full-time job would pay, and of no relevance to those whose loss-making work units have no cash to pay them.

The government is in a dilemma; to cut inflation, it must restrict bank lending, a huge proportion of which props up the state sector. Under government pledges to restructure state industry, factories unable to stand on their own feet will no longer be bailed out. But that would push millions more into poverty, a risk the cadres cannot take.

Arts and Entertainment
A bit rich: Maggie Smith in Downton Abbey
tvDownton Abbey review: It's six months since we last caught up with the Crawley clan
Frank Lampard and his non-celebration
premier leagueManchester City vs Chelsea match report from the Etihad Stadium
Arts and Entertainment
Jake Quickenden sings his heart out in his second audition
tvX Factor: How did the Jakes - and Charlie Martinez - fare?
Have you tried new the Independent Digital Edition apps?
ebooksAn unforgettable anthology of contemporary reportage
premier league
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvOnly remaining original cast-member to leave crime series
Mario Balotelli celebrates his first Liverpool goal
premier leagueLiverpool striker expressed his opinion about the 5-3 thriller with Leicester - then this happened
people'I hated him during those times'
Britain's shadow chancellor Ed Balls (L) challenges reporter Rob Merrick for the ball during the Labour Party versus the media soccer match,
peopleReporter left bleeding after tackle from shadow Chancellor in annual political football match
Arts and Entertainment
Female fans want more explicit male sex in Game of Thrones, George R R Martin says
tvSpoiler warning: Star of George RR Martin's hit series says viewers have 'not seen the last' of him/her
Dame Vivienne Westwood has been raging pretty much all of her life
peopleMemoir extracts show iconic designer 'felt pressured' into going out with Sex Pistols manager
Life and Style
fashionAlexander Fury's Spring/Summer 2015 London Fashion Week roundup
Arts and Entertainment
Lauryn Hill performing at the O2 Brixton Academy last night
musicSinger was more than 90 minutes late on stage in Brixton show
Rumer was diagnosed with bipolarity, attention deficit hyperactivity disorder and post-traumatic stress disorder: 'I was convinced it was a misdiagnosis'
peopleHer debut album caused her post-traumatic stress - how will she cope as she releases her third record?
people''Women's rights is too often synonymous with man-hating'
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Head of Marketing and Communications - London - up to £80,000

£70000 - £80000 per annum: Ashdown Group: Group Head of Marketing and Communic...

Nursery Nurse

Negotiable: Randstad Education Manchester: Level 3 Nursery Nurse required for ...

Nursery Nurse

Negotiable: Randstad Education Manchester: L3 Nursery Nurses urgently required...

SEN Teaching Assistant

Negotiable: Randstad Education Manchester: We have a number of schools based S...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam