How China’s massive population of rural migrant workers have helped fuel China’s economy is a well known story. Without their labor, China’s big cities wouldn’t have grown so quickly and Foxconn wouldn’t have been able to manufacture Apple’s iPhones and iPads at low cost.
A report from China's National Population and Family Planning Commission sheds new light on the status of 230 million migrant workers in China and their spending behavior. As wholesale urbanization continues, how these migrant workers will become true middle-class consumers is a key to consumption-driven growth as opposed to China’s traditional investment-driven planned economic growth.
Citing the government study, Reuters reported, “China's domestic migrant labor force could power consumer spending growth in the world's second biggest economy if workers had better access to basic welfare services in the cities where they live and work.”
A complication in this prescription comes from China’s stringent household registration system. Many migrant workers living in big cities lack access to education, healthcare and other services because their entitlement status is tied to their provinces of origin, not to the cities to which they have migrated.
Without access to these social services, migrants have to burn their meager savings, as they pay market rates for otherwise free (or subsidized) public services, according to the report. "Giving the migrant population living in cities permanent status and giving them equal access to fundamental public services would greatly stimulate China's consumption growth," according to the Chinese government’s latest report.
More specifically, the report found that only 23.1 percent of Chinese migrants had pension insurance in the city in which they lived in 2011. Just 13.6 percent were covered by unemployment insurance and 64.3 percent had medical insurance.
How much do they spend a year? Migrant workers, relatively low paid, spent an average of 56 percent of their salary increases in 2011, according to data in the report.Migrant workers living in any given city for one year spent 1,761 yuan ($277) on average, increasing to 2,609 yuan ($410) if they stayed for five years or longer, the report said.
City dwellers covered for basic welfare services typically spend 1.4 times as much as those who are not, the report found. The report forecasts China will have 250 million migrant workers by 2015, 190 million without access to welfare services.
Toshiba's New Magnet Free Of Chinese Rare Earths
Japan is on a mission to become less dependent on China’s rare earths.
Toshiba Corp. last week announced it has developed a powerful motor magnet that does not contain dysprosium, a rare-earth metal that comes mostly from China.
The magnet instead uses samarium, a rare-earth metal abundant in Australia and the United States, according to the Japanese company. Toshiba aims to begin sales of the magnet for use in electric vehicles and industrial equipment by March, 2013.
Junko, what you say is the reality in 99% of the cases, most don't go back. This applies identically in India as well, where in addition to city jobs, farmers who have lost lands under local government's SEZ policies and have no other option but to move to cities.
I am tempted to quote one of my favorite authors here, Oliver Wendell Holmes... "A mind that is stretched to a new idea never returns to its original dimensions!"
A US worker at Boeing cannot afford a plane either. There are many similar examples. If the Chinese products were expensive, would people buy them? The most important issue is to provide employment, as the rising unemployment in US, Europe and elsewhere is going to cause social upheaval. Welfare is self-destruct as able-bodied folk scramble for the remote in front of big LCD TVs provided by state largesse. There are generations on welfare with no intention of working all over the first-world.
When the spring festival is coming every year, I will go back to my hometown to visti my parents who I haven't seen for about one year.
My plan is save enough money to buy a house in the capital of Jiangxi province.
Many my workmates also plan to buy a house in their hometown capital or have bought a house there.
The price of shenzhen or guangzhou is so high taht I can't afford it with my incoming.
Depends on the city, in big cities like Beijing and Shanghai the professional will stay, others simply can't afford to stay and will go to home region or settle in regional or county level cities later on. This at least is the stereotypical experience for ?? (People who seek their fortunes in Beijing), ???(People who seek their fortunes in Shanghai, the strange name is a pun on western digital), ??/?? that worked in Shenzhen, Guangzhou and Dongguan.
However, for regional cities like Wuhan, Chengdu, Xuzhou etc. People tend to be from the province the city resides in and migrants will stay in the city due to more relaxed and easy Hukou transfer process and similar culture.
Also don't overlook the effect of people returning to the home region and starts business themselves, manufacturing hubs like Yiwu are initially build by this sort of village and township enterprises.
Well, without "Hu Kou", they are not allowed to live in the city. So they are bound to go home sooner or later. They lucky ones can marry to a city dweller, or go to college. There is no other way to permanently stay in a city.
Frank, I actually don't think those migrant workers are going back to their home regions. They have abandoned their home; They send the money they earn in big cities back home; their families left back home depend on their wages.
And a novel from the male worker perspective, though no translation yet.
Some reference at Marco-Economic Level:
Some reference at At personal level: