Rural China at Crossroads With nation's entry into WTO, small farmers will find it hard to compete

Shai Oster / SF Chronicle 28nov00

Zhang You Feng, a Communist Party official in charge of agricultural production in this town in the far northwestern corner of China, has a serious problem: He wants to switch Pishan's chief crop from cotton to pomegranates but doesn't have the money to buy a costly irrigation system needed to bring more water to the fields.

"If we continue like this, our future is very grim," Zhang said.

Like most farmers in this impoverished oasis in the Taklimakan Desert, Zhang earns his living from cotton. But he and nearly 800 million other Chinese farmers face a new challenge: China's expected entry into the World Trade Organization. The government has pledged to liberalize markets and lower trade barriers and tariffs in exchange for better market access for its exports.

While economic reforms will certainly boost trade and raise living standards for the nation's growing urban middle class, rural China stands to lose out, many economic observers say. The reason is simple: Most farmers use primitive techniques on small plots of land and are unable to compete with cheaper and higher quality produce grown on mechanized farms in developed nations.

In past years, government subsidies through state purchasing monopolies kept cotton prices artificially high. A partial collapse of the textile industry in the late 1990s left the state with a stockpile of 4 million tons of cotton, causing the government to slash commodity prices in half in the past two years. As a result, Pishan, a poor village of 2,000 inhabitants, is getting poorer.

Nicholas Young, publisher of Chinabrief, a quarterly survey of nongovernmental organizations in China, says that once China joins the WTO, the government will find it difficult to continue subsidizing grain production.

"Without subsidies or trade barriers, few Chinese small (land) holders would be able to compete in price or quality with North American wheat or Australian rice," he wrote.

Beijing estimates that 10 million farmers will be forced to find jobs in other areas because of tumbling prices for their goods. Independent analysts, however, say as many as 40 million could be displaced, which would swell the ranks of the 200 million peasants who have left their villages to find work in China's cities.

By the government's own standard, poverty has been nearly eliminated in China. But the official poverty line is set at only 650 yuan, or $78, a year per person -- far below the World Bank's $365 benchmark. According to the bank's gauge, there are 170 million poor farmers in China, a disproportionate amount of whom are members of the nation's ethnic minorities.

Over the past several centuries, the dominant Han Chinese have expanded their control, pushing other ethnic groups into remote and inhospitable mountain and desert regions.

Pishan is one such region. Most residents are Uighurs, a Muslim ethnic group related to the Turkish tribes of Central Asia who comprise two--fifths of Xinjiang's 16 million inhabitants. Living standards are low -- houses are made of mud and thatch, water is drawn from wells in grapevine-covered courtyards and electricity functions sporadically.

Most Uighur farmers barely have a sixth-grade education and speak their native Turkic language rather than Mandarin. Poor hygiene and health care kill 9 of every 100 children before age 5 -- double the national average.

The region's grave economic situation is a far cry from the past. Xinjiang, China's largest province, is four times the size of California. A thousand years ago, rich kingdoms dotted the oasis spread along the southern Silk Road, where a flourishing trade in silks and spices passed through nearby Kashgar on the way to Xian, then the capital of China.

But the trade routes long ago shifted to China's booming east coast; the desert increased in size, and all that remains of those kingdoms are crumbling mud walls lost in desert swells and mummified aristocrats clad in brightly colored silks that languish in museums.

Today, Xinjiang is China's major source of cotton, tomatoes, grapes and melons. A proposed $14 billion pipeline is intended to link Xinjiang's natural gas fields to Shanghai, 2,500 miles to the southeast. But that income is expected to have little impact on most local farmers, critics charge, since the operation is run by Han Chinese. Profits are expected to be funneled to the developed east.

In fact, critics say every new project seems to bring in more Han Chinese. In 1950, only 15 percent of Xinjiang's population was Han; now it is 40 percent. Since 1997, angry Uighur separatists have been blamed for riots, assassinations of Han Chinese officials and hundreds of explosions.

In Pishan, Bahar Wushoniaz regularly scans the news for changes in cotton prices. Wushoniaz, 33, who wears the traditional Muslim head scarf, is one of the lucky ones. A micro-credit program sponsored by the Canadian government has loaned her funds to start a small business selling handwoven carpets. For years, her family scraped by on her husband's cotton fields. Many days, she only had corn meal gruel to feed her three children.

"I could not buy meat. I could not even buy oil to cook with," she said.

Some Western economists say the only long-term solution for Chinese small farmers is migration to industrialized cities. But many of the farmers say that is not an option because of a lack of education and deep roots to the land.

"This is my place. This is where I was raised," said Bumaran Tochtebaken, who owns a sesame oil business. "There is no point in leaving here. What would I do? How would I make money?"