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### Viewing cable 06GUANGZHOU10741, THE GAP BETWEEN RICH AND POOR IN SHENZHEN

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
06GUANGZHOU10741 | 2006-04-07 09:09 | 2011-08-23 00:00 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Consulate Guangzhou

`

    VZCZCXRO5468
    RR RUEHAG RUEHCN RUEHDF RUEHGH RUEHIK RUEHLZ
    DE RUEHGZ #0741/01 0970909
    ZNR UUUUU ZZH
    R 070909Z APR 06
    FM AMCONSUL GUANGZHOU
    TO RUEHC/SECSTATE WASHDC 4135
    INFO RUEHOO/CHINA POSTS COLLECTIVE
    RUCNMEM/EU MEMBER STATES COLLECTIVE
    RUCPDOC/USDOC WASHDC
    RUEAIIA/CIA WASHDC
    RUEKJCS/DIA WASHDC
    RHEHNSC/NSC WASHDC
    RHHMUNA/HQ USPACOM HONOLULU HI

` `

    UNCLAS SECTION 01 OF 04 GUANGZHOU 010741

    SIPDIS

    SENSITIVE
    SIPDIS

    STATE FOR EB, R, G, EAP/CM, EAP/PD, DRL, ECA
    STATE PASS USTR
    USDOC FOR 4420/ITA/MAC/MCQUEEN, CELICO, DAS LEVINE
    USPACOM FOR FPA

    E.O. 12958: N/A
    TAGS: SOCI PGOV PHUM ECON EINV PINR CH
    SUBJECT: THE GAP BETWEEN RICH AND POOR IN SHENZHEN

    (U) THIS DOCUMENT IS SENSITIVE BUT UNCLASSIFIED.  PLEASE
    PROTECT ACCORDINGLY.  NOT FOR RELEASE OUTSIDE U.S.
    GOVERNMENT CHANNELS.  NOT FOR INTERNET PUBLICATION

    ¶1. (SBU) Summary:  Much attention is being given to China's
    growing rural-urban gap.  At the same time, the gap within
    urban areas, between established residents and migrants from
    rural areas, is becoming more marked.  Shenzhen, as China's
    richest city, enjoys unparalleled prosperity, yet at the
    same time it has more migrants than officially registered
    citizens.  These migrants face serious challenges, most
    notably widespread wage defaulting on the part of employers.
    In addition, although Shenzhen allows some migrants workers
    to register as "temporary" residents, thus granting them
    access to social services, more than a million of its
    workers are still completely unregistered -- and
    disenfranchised.  As new workers arrive in Shenzhen (and
    other Chinese cities) every day, more of them fall under
    this category, increasing the potential for urban unrest.
    End summary.

    ¶2. (SBU) With its recently announced plans to create the New
    Socialist Countryside, China's central government clearly
    signaled that it is paying close attention to the growing
    gap between the country's urban and rural areas.  China's
    breakneck economic growth since the beginning of the reform
    and opening period in 1978 has been due largely to the build-
    up of the country's manufacturing sector, often at the
    expense of its agriculture.  The idea was that eventually
    the riches would trickle down.  However, the point is fast
    approaching where the delicate balance between promoting the
    country's overall growth and continuing to place rural areas
    in the backburner becomes untenable, a fact that has not
    escaped the Chinese leadership.

    ¶3. (SBU) One does not have to leave the confines of a large
    Chinese city to see the gap in action.  As more and more
    migrants from rural areas file into the cities to take low-
    paying jobs and escape the poverty of the countryside, the
    gap is beginning to replicate itself in the cities, with the
    breach between prosperous urbanites and disenfranchised
    `waidiren' ('outsiders') becoming more marked by the day.
    Some even suggest that real flashpoints of unrest in the
    future will not be the villages, which are relatively small
    and isolated, but the slums that are emerging as more
    migrants arrive in the cities, finding a reduced number of
    opportunities, and ultimately forming into an underclass.

    A city of immigrants
    --------------------

    ¶4. (SBU) In exploring these issues in South China, Shenzhen
    is a good place to start because it, more than any other
    Chinese city, is truly a city of immigrants.  Although the
    city lies right between the two largest Cantonese-speaking
    cities in the world, in Shenzhen Mandarin is the lingua
    franca for its population drawn from all parts of China.
    According to Cai Huanxing, of the Shenzhen Labor and Social
    Security Bureau, Shenzhen's permanent population of 8.2775
    million includes 4.7 million registered migrant workers.
    These 4.7 million migrants are considered "temporary
    residents;" the rest of the permanent population holds a
    Shenzhen `hukou' (household registration).  Additionally,
    there are scores of unregistered migrant workers, whose
    numbers probably exceed one million.  With a history that
    spans just over 25 years, Shenzhen can count few true
    natives.  It is therefore safe to assume that most of its
    permanent population is originally from elsewhere.  Of
    course, the experience of urban transplants from Beijing and
    other major cities has little in common with that of
    migrants from the impoverished countryside and inland
    provinces.

    The lay of the land:  From Eco-Square to Longgan
    --------------------------------------------- ----

    ¶5. (SBU) Deng Xiaoping, Shenzhen's intellectual father,
    would be proud of the scene at Shenzhen's Ecological Square.
    Here, in the heart of a prosperous neighborhood, a true
    Chinese middle class is at play.  The impact of China's

    GUANGZHOU 00010741  002 OF 004

    opening-up, spearheaded by the creation of special economic
    zones (SEZ) in southern China (of which Shenzhen was the
    first) has few expressions more tangible than these merry,
    urbane folks walking their dogs and choreographing dance
    routines in a public space that is, literally, an ode to
    sustainable development.  It is the success of people like
    these that have made Shenzhen the richest city in China,
    with the highest per capita income of the nation.

    ¶6. (SBU) Meanwhile, one does not have to leave Shenzhen's
    municipal limits to find the Pearl River Delta of dusty
    streets and decrepit buildings amidst which factories
    staffed by young men and women from the Chinese hinterlands
    toil away to churn out the goods that are cheaper to make in
    China, largely because these young laborers are abundant,
    and thus cheap.  In between these two extremes, every
    restaurant, hotel and sauna in the city provides a perch
    from which young `waidiren' can take a peek, as outsiders,
    at the other China, the one they were looking for when they
    left their hometowns.  At that time, many, if not most of
    them, brimmed with excitement at the prospect of life in the
    South's gleaming metropolis.

    Rude awakenings
    ---------------

    ¶7. (SBU) However, a new life in the big city is not
    necessarily a bed of roses.  Working conditions in the
    Delta's factories can be rough, with stories heard of forced
    overtime, lockups, and even beatings.  Usually lacking a
    `hukou,' these migrants in effect become second-class
    citizens, with reduced or no access to social services.
    Their illegitimate status also makes them easy prey for
    unscrupulous bosses who pay them less than "legal" workers.

    Wage defaulting
    ---------------

    ¶8. (SBU) The most prevalent and serious problem faced by
    Shenzhen's migrants is the wage defaulting by their
    employers.  According to the China Daily, in 2005, some
    1,300 Shenzhen companies were fined a total of USD 5.87
    million for defaulting on wages, while workers recovered USD
    35.8 million in withheld wages during the same period.
    During the lead-up to the Chinese New Year, the violation of
    workers' right almost becomes institutionalized, as many
    employers withhold wages in an attempt to force workers to
    come back after their trips home for the celebration.

    ¶9. (SBU) When wages are withheld, the Shenzhen authorities
    are ready to take "serious, effective measures" to help the
    workers get their money back, according to Cai.  In fact,
    earlier this year, eight Shenzhen executives became the
    first defaulters to be criminally prosecuted in China.  A
    recent edition of the Labor and Social Security Bureau's
    magazine featured an article on this prosecution, complete
    with pictures of the accused being presented to the public,
    handcuffed and wearing black hoods, and flanked by police.
    The initial thought that the hoods were provided to protect
    the suspects' anonymity was dispelled when it was noticed
    that their names were displayed on their standard-issue
    prison sweatshirts.

    A need to placate the masses?
    -----------------------------

    ¶10. (SBU) A move towards a more heavy-handed approach serves
    more than just the pursuit of justice.  As the gulf between
    rich and poor grows in China's major cities, giving concrete
    examples of how everyone is in fact equal before the law is
    essential in preserving social stability.  In fact, the
    crackdown in Shenzhen came on the heels of much-publicized
    protests and work stoppages by unpaid laborers, and was
    perhaps aimed at placating the workers and discouraging
    others from following their example.

    ¶11. (SBU) People's patience as they "wait for their turn"
    may quickly wear thin if they perceive that the authorities
    are, even indirectly, sanctioning their plight in order to
    allow the privileged to get richer.  In many locations in

    GUANGZHOU 00010741  003 OF 004

    the countryside, this turning point has been reached.  There
    the spark usually involves land, or more accurately
    inadequate compensation for it, aggravated by the corruption
    of local officials.  In the cities, where land is basically
    a non-issue, in addition to wages, another potential bone of
    contention is the issue of the `hukou.'

    `Hukou' save lives
    ---------------------

    ¶12. (SBU) Although some estimates place 150-200 million
    Chinese living outside their official place of residence,
    without a `hukou,' a person may be unable to receive even
    basic public services in a given locality.  Even
    bureaucratic procedures such as securing a permit to visit
    Hong Kong or Macau can only be undertaken in one's city of
    `hukou.'  In effect, the `hukou'-less workers are
    undocumented aliens.  According to one Delta resident, the
    discrimination that the `hukou' issue creates is even
    directly responsible for the deaths of children that, unable
    to attend school for lack of a `hukou,' are left unattended
    by their migrant-worker parents, and then fall to tragedy.

    ¶13. (SBU) Still, the issue of `hukou' reform is
    controversial, although there are a growing number of voices
    calling for it.  Policymakers and urban residents alike fear
    that such a liberalization of the rules would lead to an
    even larger, potentially upsetting influx of more `waidiren'
    to the cities.  The irony, of course, is that the large-
    scale, technically illegal migration that has occurred in
    China has been fundamental to China's, and the Delta's,
    remarkable economic growth in the past couple of decades,
    which has pumped disposable income into the pockets of, more
    than anyone else, city dwellers.

    Shenzhen's model
    ----------------

    ¶14. (SBU) Shenzhen is one step ahead of the game in this
    regard.  Despite having a massive migrant-worker population,
    most of it does not face the `hukou' issues that are so
    contentious for millions of migrants across the country.
    Since 1984, Shenzhen allows migrants workers to register as
    "temporary residents," a status that, while short of full
    "citizenship," still allows them to enjoy public service
    benefits such as education for their children and access to
    health care.  Now, some 4.7 million migrants are considered
    "temporary residents" of Shenzhen.  In most other major
    Chinese cities, there is no similar "in-between," and
    workers that cannot become officially registered
    (predictably, not an easy task) are often terribly
    disenfranchised.

    ¶15. (SBU) Still, not all of Shenzhen's migrant workers are
    registered.  It is estimated that at least a million
    migrants are not registered at all.  As the city continues
    to receive an influx of workers, which is expected, a larger
    percentage of the city's population may fall under this
    uncounted -- and disenfranchised -- category.

    Urban concerns
    --------------

    ¶16. (SBU) As the intra-urban gap grows, it is not just the
    migrants' dissatisfaction that could fuel problems.  The
    more-established city dwellers are sometimes, more than just
    aloof or self-centered, hostile to the `waidiren.'  As we
    mentioned above, many city dwellers oppose `hukou' reform,
    and this is partly because of concern about the strain that
    migrants place upon their cities.  For others, the migrants
    are not only a negative force in their city, but in fact the
    alleged cause for some of their city's worst problems (which
    ostensibly did not exist in the past or were less of a
    problem).  Yuan Yunzu, an organizer at the Disabled Workers'
    Service Center and Sichuan native, frankly said that city
    residents are often "afraid" of the migrants.  One Guangzhou
    native expressed her view that migrants were "dirty"
    (`zang'), and that it was their bumpkin ways that made her
    city dirty and unsanitary.  Meanwhile, a Hong Kong
    businessman attributed the rise in crime in both Shenzhen

    GUANGZHOU 00010741  004 OF 004

    and Guangzhou to the increased presence of migrants, who
    prefer the easy way of making money.

    Comment: Keep your eye on the cities
    ------------------------------------

    ¶17. (SBU) For many China-watchers, the villages in the
    countryside are the place to watch as the concerns over
    social stability in China continue.  Without detracting from
    that view, China's cities should not be discounted.  As a
    scholar noted recently, unrest in the villages is relatively
    easy to quell, because of their small populations and their
    isolation.  If something goes wrong in a major urban center,
    it could be a very different story.

    ¶18. (SBU) Moreover, cities are a gathering place for
    migrants from all over the country, where they can exchange
    stories and relate their experiences.  Despite the large
    number of "incidents" in rural areas (even as reported by
    government authorities), the almost-negligible connection
    between these incidents is remarkable.  Part of this is due
    to the fact that, again, these villages are relatively
    isolated, making it hard for the villagers to see their
    plight as part of a larger trend.  Meanwhile, the cities can
    provide the perfect forum for that to occur.

    ¶19. (SBU) With its relatively forward-thinking attitude
    towards migrants, Shenzhen may be reducing its chances of
    being a focus for unrest.  By allowing most of its migrants
    to register, it enfranchises them, and makes them less
    likely to be critically disenchanted.  At the same time, the
    city is the richest in China, and its outward signs of
    affluence may accentuate the gap between the haves and the
    have-nots.  Recently, the city government fast-tracked the
    residency permit for a beauty queen from the Northeast, so
    that she could represent Shenzhen in upcoming events.  The
    city leaders were probably motivated by civic pride, but for
    many `waidiren,' it was a slap in the face.  Likewise, the
    wealth and prosperity that so many in Shenzhen enjoy, and of
    which the city leaders are understandably proud, may in
    other quarters cause resentment and, although we hope not,
    anger.

    ¶20. (SBU) What is clear, however, is that Shenzhen is a
    unique city, and its experiences may or may not apply across
    the board, even within the Pearl River Delta.  In the coming
    months, we plan to explore these issues in other cities in
    South China.

    DONG

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