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Rural Roulette

Rural Roulette
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Leo Lewis, China Bureau Chief for The Times, looks at the repercussions of local economic disruption.

Few introductions to China have been as vivid as the village of Baishu, a shepherdess with debts of £9,200 and an entire rural community betting the farm on a game of economic Russian roulette. Since my arrival in January (after eight years in Japan) as China Bureau Chief for The Times, many have informed me in sepulchral tones that I have landed in country at a “weird” time.

For a variety of complex and sometimes baffling reasons, the world’s second largest economy is in cautious mood. Old hands, and even those with relatively fresh experience of the world’s second largest economy, can feel the tension rising. If there is a renewed sense of panic over outspoken dissenters and the possible public unrest they might stir, does Beijing know something specific about the fragility of society or its ability to keep the masses content?
I wondered that especially strongly in Baishu – one of several farming villages an hour or so south of Beijing that has gone visibly berserk. On nearly every doorstep sits a tall palette of bricks; cement is being mixed vigorously in the dusty streets; all around farmers are busily throwing-up absurd, flimsy extensions to their homes.
Many have gone into deep debt, both to loan sharks and one another, to finance this construction mania. The shepherdess I met had just built a 60 square metre “house” (no foundations, no interior) in her back yard as her neighbour considered adding a second floor to his garden shed.

And all of this is an almighty gamble. The villages dotted around the Daxing district are each playing the same game – improving their homes as much as they can possibly afford in the hope that their entire village is selected for destruction to make way for Beijing’s proposed second airport.
Only one village, it seems, will be “lucky” enough to suffer this fate, and its inhabitants want to make sure that the (house-size related) compensation they receive when their homes are bulldozed is as large as it possibly can be. If the village is allowed to stand, many will be ruined.
This is what the Chinese government may, at a gut level, be most concerned about – not the potential unrest of the villagers of Daxing whose bets will go sour, but the fact that the public unequivocally responds to every economic stimulus out there.

And when you have a vast population with a high sensitivity to stimuli, and the stakes involved in micro-policymaking are so high, it breeds uncertainty in even the most evenhanded, steely-nerved leaders. Leveraged betting, hoarding, panic-buying, price-gouging and predatory lending are just a few of the unfortunate potential consequences for a lack of foresight in some policies, and Beijing’s current cautiousness is an admission that mistakes can happen.”

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