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LABOUR: Villages Taste the Fruits of China’s Urban Boom

Ulysses de la Torre

MEXICO CITY, Dec 12 2005 (IPS) - As the amounts of money migrant workers send home globally every year continue to grow, a new study estimates the volume of money transferred by migrants within China’s borders to be bigger than any cross-border market in the world.

The report, released by the Consultative Group to Assist the Poor (CGAP), a consortium of 31 public and private development agencies housed within the World Bank, indicates that workers migrating primarily from rural to urban regions of China will have sent home nearly 30 billion dollars in 2005.

India, widely considered to be the largest recipient of money transfers from migrant workers overseas – commonly referred to as remittances – is expected to receive nearly 22 billion dollars, according to World Bank figures, with China close behind in international receipts.

Jennifer Isern, CGAP’s lead microfinance specialist who commissioned the study, said she isn’t surprised that China’s domestic remittances market is bigger than what it – or any other country – receives from abroad.

“It takes a certain amount of capital to be able to travel the long distance, say from India to the U.K. or from the Philippines to Saudi Arabia, and a lot of people may not be able to gather that, at least initially, so they’re migrating a shorter distance for labour,” Isern told IPS.

“Eventually, maybe they make a leap and in certain corridors we may be seeing more of this. But our theory is that the intra-regional and domestic remittances are at least as important as these long distance corridors because more migrants are going shorter distances.”

The report further estimates that the domestic migration flow in China this year will total 95 million people, who will have sent home an average of 300 to 400 dollars each by the year’s end. China’s domestic migrant labour market is expected to grow by 10 million migrants each year through 2007.

By contrast, the United States-Mexico corridor, which at 18 billion dollars represents the largest single country-to-country remittance market in the world, is driven by nearly six million Mexican migrant workers, according to research done by the Pew Hispanic Centre in Washington. The migrant Mexican population is estimated to grow by 400,000 per year.

The Chinese government is currently developing a strategy of decentralising growth and promoting more regional centres of economic development in order to accommodate its expected demographic shifts. The aim is to disperse migrant labour across a wider cross-section of the country, but Dr. Enjiang Cheng, a senior research fellow at the Centre for Strategic Economic Studies at Victoria University in Melbourne, Australia who is one of the report’s authors, said that there is still much work to be done.

“The government is working to remove the restriction on domestic migration and to overhaul the residential system in China,” Cheng told IPS by email. “However, it has encountered strong resistance from local governments, especially the governments of large cities that have provided their residents with various benefits.”

Dr. Cheng added that if it becomes easier for migrant workers to settle permanently in large cities, one thing he would expect is a higher proportion of female migrant workers, as more families will move and settle in urban areas.

While the report’s surveys found that women make up 25 to 30 percent of the domestic migrant labour force, Isern said she thinks it is still too early to make any definitive statements about the gender divide.

Another potential impact of such a strategy would be a shift in the proportion of income that domestic migrants in China send home.

“The proportion of incomes sent home by an average migrant worker will be lower, when the families are together,” Dr. Cheng continued. “However, the overall amount of remittances by migrant workers will be difficult to estimate, as a change in the residential system may encourage more rural labourers to migrate, and the average wages of migrant workers may increase.”

The report also suggests that 75 percent of China’s domestic remittances are sent through the China Post, commercial banks and rural credit cooperatives, but pinpointing a precise proportion channeled through the country’s formal sector poses complications similar to those found in other markets.

“Any figures with regard to remittances are very hard to come by,” said David Landsman, executive director of the National Money Transmitters Association, adding that for China specifically, its centuries-old system of transferring money outside of formal channels over large distances makes the task all the more difficult.

“Looking at remittances elsewhere in the world, there are a lot of informal remittances happening and some sources would say they’re as high or higher than formal remittances globally,” said Isern. “I still question the [75 percent] figure but this is what we’re getting out of interviews and very informed surveys and a lot of digging… I still am just wondering if there isn’t just more out there, a kind of hidden side of the iceberg.”

*Ulysses de la Torre is a journalism fellow at the Autonomous Technological Institute of Mexico in Mexico City.