China's Beauty Problem

India's ugly cities are less cruel to their rural migrants than China's plush ones


I was traveling across Eastern China on a high-speed train last summer when my Chinese host from the U.S.-China Exchange Foundation, who had recently visited India, my native country, asked: "Why are there so many poor people on the streets of Indian cities?" I was taken aback because I had been wondering just the reverse about her country: Why are there so few poor people in Chinese cities?

The visibility of India's poor is a big weakness when it comes to impressing tourists. But from the standpoint of dealing with the poor's plight, it might actually signal Indian democracy's strength.

Compared to Indian cities, China's major cities are a vision of loveliness. It's as if a wave of liberalization swept through them, washed them clean, lifted their residents out of poverty, and saved them from all the intervening ugliness and misery that industrializing societies have historically experienced. They have a balletic freeway system; snazzy shopping malls; stylish skylines. And there are more homeless folks wandering around in New York and Washington D.C. than in Shanghai and Beijing.

By contrast, liberalization has been a mixed blessing for Indian cities, producing both enormous progress and enormous problems. Malls, metros, and freeways are cropping everywhere, as in China. However, for every mall that appears, so does a slum colony—often right next to it. People are getting richer, but their quality of life in some respects is deteriorating as rapid urbanization strains roads and other infrastructure, giving Indian cities the feel of dense concrete jungles choking on their own growth.

One big reason why Chinese cities are in far better shape than India's is that China's autocracy has managed growth far more rationally than India's democracy. It has made a conscious effort to build up urban infrastructure to support China's export-led modernization, investing $116 per head on capital expenditures annually—more than six times India—according to a 2010 McKinsey Global Institute report.

But the darker half of China's beauty secret is that it controls domestic migration through a draconian internal passport system called hukou. Under hukou, every citizen is assigned a status—urban or rural—upon birth, creating a kind of locational apartheid. If people want to move outside their birth hukou, they need official permission, which was virtually impossible to get before liberalization. Now, thanks to the need for cheap labor in China's urban factories, men can get permission by paying a fee. Women have to pay—and take a pregnancy test to prove that they are not moving to evade birth control restrictions!

Once hukou migrants—dubbed the "the floating population"—arrive in cities, their living options are mainly consigned to ghettos, invisible to tourists. Beijing authorities are so determined to keep them sequestered that, on the pretext of dealing with rising crime, last July they began walling off native neighborhoods—erecting fences and posting guards to check identity papers before letting anyone in.

But hukou restricts more than mobility. It restricts social services too. Migrants are not entitled to any of the social services that urban residents get unless they convert their temporary visa to permanent residency, something that is exceedingly hard to do. "They can't get admission in city public schools or get adequate health insurance or other subsidized services or even city bus passes," notes Professor Kam Wing Chan, a hukou expert at the University of Washington. Hukou makes city life so hard that many couples leave their children home to be raised by grandparents, breaking up families.

Just when China embraced hukou, India enshrined freedom of movement in its constitution, empowering rural families to move to cities at will. And once they are there, the government can control neither their social benefits (paltry though they are, consisting mainly of subsidized rations and schools) nor where they live. Any attempt at Chinese-style sequestration would trigger massive protests by activists and the opposition, dooming an administration that even tried. The upshot is that migrants are an ubiquitous presence in Indian cities, densely interwoven into the fabric of life like embroidery in a brocade blouse.

In many respects, Indian migrants are worse off than their Chinese counterparts. Basic amenities—drinking water, sewage facilities, housing—are better in China's ghettos than in India's slums. Worse, the perception that villagers are straining roads and services is triggering an ugly nativist backlash in many cities. A virulent "sons of soil" party in Mumbai has been roughing up slum residents to force them to return home.

But there is one thing Indian migrants have that the Chinese don't: the vote. Before every election, politicians hold voter registration drives in slums, making it hard for nativists to gain political traction. But they won't be permanently defeated unless the country's urban infrastructure is improved. To do that, India will need to up its infrastructure spending from $17 to $134 per head over the next decade—or $1.2 trillion, double what is currently slated, McKinsey estimates. This won't be easy given that influential agrarian activists unhappy with India's urban-centered economic renaissance will fight spending on cities.

But India's infrastructure issues, while difficult, are nothing compared to the problems China faces in assimilating its migrants. That's because half-a-century of social engineering has decimated China's civil society, something that will be much harder to rebuild than roads and power lines.

China's one-child policy has undermined the safety net that the elderly normally rely on in traditional societies. This is one problem India does not have thanks to its democracy that put a decisive end to its brief flirtation with draconian population control through enforced sterilization in the 1970s. Hence, India's tightly-knit extended family structure is largely intact, a gift of freedom to the country's elderly.

Since China no longer has such a private safety net, its aging migrants will need a public one—just what hukou denies them. If China fails to extend hukou benefits, its large and disaffected underclass of deracinated, rural population might become a political tinderbox, ready to explode. Yet doing so won't be easy. The McKinsey study projects that this will require diverting 2.5 percent of China's urban GDP to its migrants by 2025. This means either spending cuts, especially on infrastructure—something that would risk puncturing the asset bubble that many believe has been artificially keeping China's economy afloat. Or trimming the hukou benefits of middle-class natives and extending them to migrants.

Both strategies have massive political downsides—precisely because China does not have a ballot box to resolve them. All its autocracy has is brute force, which might have worked so long as the economic pie was growing. But redistributing that pie coercively is an entirely different matter.

China, then, has not yet fully absorbed the consequences of destroying its civil society—and India hasn't yet fully reaped the rewards of letting its flourish. So when it comes to looking after the most vulnerable, appearances aside, India's pell-mell democracy might yet outperform China's hyper-rational autocracy. 

Shikha Dalmia is a senior analyst at Reason Foundation and a columnist at The Daily, America's first iPad newspaper, where a version of this column originally appeared.

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  1. The beauty of Eminent Domain. China can declare its poor blight and transfer title of them to businesses for fair market value. India apparently can’t.

  2. One of the reasons China has done so well with factories is because China concentrated its education efforts on the children of peasants in the countryside for decades.

    India is a world class power in terms of education at the top of the pyramid. India’s computer scientists and engineers are absolutely world class…

    But that doesn’t do much to prepare the children of peasant farmers for factory work. We tend to think of factory work here in the United States as being for people who aren’t educated, but when we’re talking about emerging markets, “uneducated” is a relative thing.

    One must be able to read instructions and follow directions in order to be suitable for factory work. One must be able to measure things…

    Where India’s education system prepared several million among the elite to be world class computer scientists and engineers, China’s education system prepared the children of hundreds of millions of peasants to be suitable for factory work.

    I’m sure that situation will rectify itself as the opportunities for new kinds of work proliferate–over the next decade or so. But it shouldn’t be a surprise that India was caught flat-footed in the race for the opportunities of today.

    As rotten as public education is compared to the private alternative, it’s a lot better than no education at all.

    1. In other words, public schools stink, and private schools are probably a better solution; regardless, leaving hundreds of millions of your people illiterate and uneducated has economic consequences.

      India’s literacy rate for people above the age of 15 is 66%. China’s literacy rate is up over 90%.

      That gap probably does a lot to account for the differences observed between the two.

      1. Supposedly Cuba’s Literacy rate is 100%.
        I can’t be the only one who thinks that certain countries basically claim a higher literacy rate than the actual figure.

        1. I wouldn’t put it past them to beef their numbers up; regardless, China’s primary and secondary education system is very egalitarian and has been for a long time.

          The differences in literacy, I think, are confirmed by the relative reluctance of manufacturers to move their manufacturing operations to India.

          1. Actually, the main problem with India’s non knowledge intensive sectors is that they are still over regulated. Most of the higher education dependent businesses have been deregulated, especially for the sake of international competition, but the man on the street still faces a wall of regulation if he/she wants to run a small business. It’s no wonder that India is becoming so stratified.

            I’m not saying that education problems don’t play a role, but the double standard regulatory system probably creates the most problems for low level workers. At the very least, it prevents them from acquiring skills and education that would allow them to be more productive.

    2. But that’s just it, Ken….India wasn’t “caught flat-footed in the race for the opportunities of today”.

      You don’t hear of call-centers and tech-support being outsourced to China, do you?

      Both countries’ economies are growing about as fast as they can. Both countries are struggling with building infrastructure fast enough to keep up with demand.

      It’s just a matter of different styles of growth, as Shikha points out above.

  3. Great article Dalmia. Centralized economic planers tend to underrate goods that aren’t easily quantifiable, like family, which leads to polices that destroy those goods.

  4. “All its autocracy has is brute force, which might have worked so long as the economic pie was growing. But redistributing that pie coercively is an entirely different matter.”

    I dunno. Our democracy is pretty good at coercing re-distrbution…

  5. half-a-century of social engineering has decimated China’s civil society, something that will be much harder to rebuild than roads and power lines.

    Pretty much the same way social engineering has decimated America’s civil society through cheap credit, government-imposed “safety nets” and inflation.

    1. Well, you do have to hand it to the ChiComs as far as actually killing their own citizens by the millions. Compared to them, our “progressives” have been pikers.

      So far….

  6. This is a good piece, addressing the fundamentals of the China-India differences in treating their internal migrants, and, more broadly, the different urbanization/development models. With regards to the ballot box, China’s Congress actually reformed the voting law almost exactly a year ago to give the same equal “one head one vote” to the rural and urban populations (previously, the ratio was 4 to 1 in favor of the city). If each rural migrant, now having the same political representation as an urban resident under the new law, can vote in the city where he or she lives and works, there is a real possibility of reversing some of the current unfavorable treatments towards migrants (see my opinion at…..m-in-china). After all, this migrant labor population is huge: about 150 million by one estimate last year.

  7. Why should a libertarian object to denying social services to people who voluntarily move to a place with the knowledge that said services will not be provided to them? And isn’t migration without voting rights & social services just what is proposed by Lant Pritchett, lauded in Reason magazine?

    1. One libertarian does not speak for all libertarians. Reason gives a voice to several different types of libertarians that often disagree with one another.

      I’m not necessarily morally opposed to the hukou system. It is simply creating a lot of “matter of fact” problems. Restrictions on migration are always at least a little anti liberty too.

  8. “They can’t get admission in city public schools or get adequate health insurance” notes Professor Kam Wing Chan

    Repeat after me Professor: Health insurance is not metonymous with health care. In the case of glorious China I doubt they have either.

  9. I lived in China for 3 years. Beijing, Shanghai, and Shenzhen are the only places there that I would consider living in…even though those cities have some horrible parts, it’s possible to live a pretty cushy western lifestyle there if you know where to live, where to go, etc.

    I do think that the central planners really screwed the country over with the One Child Policy. It’ll surely have gargantuan unintended consequences down the road…it’s already happening in the countryside, where70% of the young people are males. The effects will get worse as the people born after it started (1986, i think) mature.

  10. There was a great piece in the L.A Times recently about a city worker who went back to his village for Chinese New Year. What struck me was how unhappy and miserable everyone was, pretty much across the board, him, his wife, and teenage kids.

    Having been in India, in spite of the poverty, the people are free to move about more, and that is huge.

  11. basically, it sucks to be poor…

  12. I think the author is just pretend to know well of the society of china,but the truth is that you do not know anything,the knowlege is sluggish in 1990s,things have changed a lot,you are just assuming it ,most of what you said is out of fashion,today’s china is different

    1. Deal Riszet,
      We rear solly dat Newpiece of GraciousHomerand China paint-a rear bad pitcha. Dat is burrshet! Prease take-a dis as’s sincerrest aporogies!!

  13. I think we’re sold on a lot of hype about China. Everything they do – from economic, military, civic – is a poor facsimile.

    The economic state of the nation is on a tiny foundation of a one party solution with severe micro-management. Everything is tinkered with and appearances managed. Yes, we do that here – but their scale is much grander and their bubble is much, much bigger.

    Their military is full of numbers but not sustainable innovation or technology.

    They own American debt, but their system relies heavily on foreign investment. Should a worst case scenario emerge, they would be the ones hardest hit.

    They own international resources on a large scale but couldn’t protect those assets if needed.

    They may plan well for the long-term as people have suggested before, but their ignorance on how important some of the foundations of society are will see their plans fall short. Issues such as religion, family and liberty do lead to a less pretty nation with much more internal strife, but removing them so that the state controls everyone’s destiny will prove a fatal mistake for China.

    All the issues that Americans fear China for cannot not last. They cannot ‘reform’ the system much more as central control is essential to keeping up their smoke and mirrors. Their whole nation hangs by a thread. Once people lose faith in the party (in large enough numbers) the system will implode.

    * Queue replies on how much like them we are. Well not yet, we’re not beyond reform.

  14. “today’s china is different”

    haha, couldn’t be more obvious. is that the new part slogan?

    1. (* party slogan)

  15. Well, there is certainly lot of hype about China. But, how many things in that country are “ORIGINAL”. I do not know why the multi-national companies are setting up factories in China, just because it has cheap labour?? And it also helps them to save cost and show better performance to their shareholders. It all boils down to the moneny making either by hook or by crook. Most of the engineering equipments in China are a exact copy of either a european company or a american corporation. Remember the case of Chinese Stealth Fighter the whole design and the specifications have been lifted from a american corporation which is into military harware and equipments. There are many such instances that are visible and some which will remain invisible forever, maybe. The einter country and its ecomony is export driven, China consumes nothing what is produces in its factories. The Chinese government is heavily subsidizing its exporters and this subsidy is creating huge problems for manufacturers in other countries. There is nothing transperent in China. It will not be long for China to realise the wrong path its treating of artifically keeping its economy afloat. The global recession has been just the begining of what is going to follow for China in the years to come.

  16. Bullshit?Most of Chinese Migrand workers have big house in the contryside, their children go to school for free, and agricultural activities is tax-free, what a nice social welfare?

  17. this is a good article that makes people feel better.

    this is a good write that serves to help people better. it is true that democracy is most important; so many people have died for fighting it. what is the point of living a good life without right to vote? indian people look poor on the surface, but they are very happy and proud indeed, because they can vote. American people are rich and have right to vote, as is even better, and this is why everyone wants to come here. china is stupid, she lends money to america, but eventually it is america stands in control. why? she can push china to raise the value of its dollar and she can push china to do loan modification which is prevailing in america now, and eventaully america owes nothing to china, free and clear! china ships solid goods to america; america gives dollar value in the abstract to china, who is smarter? therefore american people should love its government who is the smartest in the world. being born in america is lucky: you are born with a silver spoon in your mouth and the right to vote. eventually india will be like america as long as people make more money, because they have right to vote already, it is easier for them to reach a nation of perfection which is america. before i conclude, i would invite the author to talk about caste system in india and compare it to the system of china. thank you.

  18. Well I guess we really cannot compare China and India. I think that China is really a Wealthy country that is why you cannot see poor people and with its 1 child policy, I think the parents can really give something to their child and live a life that is not that harsh.

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