Wang Xiyu, Cui Chuanyi, Zhao Yang & Ma Zhongdong

Research Report No 40, 2000

Trans-regional migration has become an important form of employment for rural laborers, and has come to be referred to as the “tide of rural laborers” in recent years. A series of issues such as appraisal of the phenomenon itself and its effects on the development of the rural and the urban areas have aroused concern from many scholars and relevant departments of the Chinese Government2.

Due to the many links in the trans-regional migration of laborers, and the inter-connection of the various kinds of issues involved, the problems that have cropped up therefrom have become all the more complicated. Viewed from the angle of the urban areas, in particular, some negative effects have been created, such as conflicts between employment of rural and urban labors, and social order3. The Central Government has not yet formulated any unified policies or management standards on this issue4. Local governments, especially those of some big and medium-sized cities, have promulgated a series of policy regulations in the hope of standardizing the trans-regional migration of laborers and wiping out the negative effects of this migration. Except for some short-lived effects, however, these policy regulations have failed to produce any results in anticipation or provide any solution to existing problems from a long-term point of view5. They have even given rise to the disorderly “vicious circle” of “migration – restriction of migration (or return of migrants) – remigration”.

Modernization in China is a modernization of farmers who make up the majority of the country’s population, to a great extent. This process is very much similar to that in the world’s developed countries, that is, for a relatively long period of time, there will be a binary structure composed of the modern industries in the urban areas and the comparatively traditional agriculture in the rural areas. As the rural population and laborers move into non-agricultural sectors and urban areas, farmers will decrease in number and become managers of a modern agriculture.

It is our opinion that after many years of practicing a planned economic system and the system splitting the urban and the rural areas, a special binary structure, or a “dual binary structure” as has been termed or a “three-polar structure” as it is in fact, has gradually taken shape in China with the progress of the market-oriented reform1. The transfer of rural laborers and the progress of the reform are closely related to the process of gradual evolution of this special binary structure. It is imperative at present to find out solution to the problems mentioned above, and especially to determine the role to be played by governments in the massive trans-regional migration of rural laborers.

I. Background of the migration: Speciality of the binary structure in the development of China’s modernization

1. The international theory about the binary structure and transfer of jobs is still of significance to the understanding of China’s current stage of development.

Concerning the transfer of the structure of employment in the process of modernization, Arthur Lewis (1954) put forward the famous theory of transfer of jobs under a binary economic structure on the basis of others’ explorations. First of all, he divided the economy of a developing country into two major sections: the traditional section carrying out production according to the pre-capitalistic mode of production, which includes agriculture, some small commercial and service sectors, and the modern section adopting the capitalistic mode of production. The key point of Lewis’ theory about the transfer of jobs under a binary structure is that as the traditional section has massive hidden unemployment, industrial departments would make use of the transfer of cheap and limitless labor resources from hidden unemployment in agriculture to support capital accumulation of modern industrial departments. Although some people have pointed out many defects in this theory, most people have affirmed the significance of his theory in two aspects: First, it has described the process and driving force of industrialization of an agricultural country, pointed out the imbalance of development between the two different sections, and proposed to spur economic development through expansion of the modern section. Second, it has drawn the framework of the binary structure for analyzing the economic status quo of developing countries, thus laying the foundation for the exploration of the law of economic development in developing countries from the angle of evolution of their economic structures and the transfer of jobs.

This theory of Lewis is still of great help to the understanding of the current stage of development in China. We think, however, that to bring the binary structure into correspondence with the urban and the rural economies in a strict way does not conform with the reality in China. It is too simplified, in particular, when it is used as an example for the analysis of the phenomenon of the “tide of rural laborers”. The economic characteristics of the “dual binary structure” have already become noticeable in many developing countries, and the binary character of rural and urban economies stand side by side, at the same time, with the binary character of the economic elements within each section (J.Z.Ma, 1999).

As a matter of fact, the rural economy is composed of two parts with different economic features: the traditional, labor-force excessive and self-sufficient part T (traditional sector), which is characterized by low incomes and high risks of agricultural production, and part N (nontraditional sector) which includes small private enterprises and industries specialized in planting, services and labor-intensive sectors. In the same way, the urban economy is also composed of two parts: the modern part F (formal part), which is standardized and high in productivity, providing stable employment in usual cases, and high and stable incomes; and part I (informal part), which includes privately-run labor-intensive services and other industries. Those working in this part earn comparatively low and unstable incomes, and income levels usually appears as Wf > Wi > Wn > Wt. Just as we will point out below, the trans-regional migration of rural laborers in China has taken place under a special binary structure as mentioned above, and the direction of migration usually goes progressively from part T with comparatively low incomes to part N, Part I or even Part F.1. For a rural household that can eke out a living, migration and transfer of jobs are often subject to restrictions of limited resources endowed upon it. These resources include: (1). physical resources; (2). human resources including the level of education, technology, market experience, and ability to start new business; and (3). social resources.

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