Special Report: Is Wen's "new socialist countryside" working?

When Chinese premier Wen Jiabao visited Zhao Mengleng's village, she hoped to show him the cracks threatening her mud-brick home, a reminder that the country's embryonic prosperity has not reached everybody in the vast rural heartland.

The 68-year-old prime minister, who has cultivated an image as a man of the people and is popularly known as "Grandpa Wen, visited Zhaoyuan village in eastern Anhui province during the Chinese New Year holidays.

He came to support his pledge to narrow the rich-poor gap and channel more wealth to China's 720 million villagers and rural migrant workers, a population more than double the size of the United States.

Zhaoyuan and nearby villages in the impoverished Dabie Mountains have shown signs of rising incomes, which largely depend on a job-making machine that sends rural migrants out to work in factories, mines and building sites.

If that machine sputters, many more Chinese villagers will struggle to escape the hardship Zhao described from the stoop of her home.

"I'm glad he came to see how we live, but I also wanted him to stay longer and see more," said Zhao of Wen's visit of about 40 minutes, which did not include her house. In front of her sat a pile of bricks that she hoped one day her family could afford to build into a new home. "I'm sick, the home is falling down, and the kids' costs are too much," said the woman with a papery voice and constant cough. Her husband was a migrant laborer, but struggled to find decent work because of illness and illiteracy, she said.

The kitchen inside her house was spare and cold at a time of year when many rural families celebrate the Lunar New Year holidays with meat and liquor.

"The leaders say they want to help poor people, but down here we don't know where the money ends up," Zhao said.

NEW SOCIALIST COUNTRYSIDE

China's government believes raising the incomes and welfare of rural residents is crucial to long-term growth and to protect the ruling Communist Party from discontent that could fester into threats to its rule.

Since Wen and President Hu Jintao came to office in 2003, they have vowed to create a "new socialist countryside," an effort that will form a cornerstone of their legacy. They are expected to leave office in 2012.

Residents in Zhaoyuan said their lives have indeed improved. New two-story, concrete-and-tile homes poked above the trees and bamboo, some with decorative columns out front and big color televisions blaring inside. Better-off families have been buying cars, unheard of a few years ago.

"Life has been getting better. It all depends on the young people going out to work. If they didn't work, we'd be as poor as before," said Zheng Wangong, a 55-year-old farmer, sitting in front of a semi-finished brick house, with strings of half-cured pork and home-made sausages hanging from the rafters.

Wen and other Beijing policymakers want to wean the economy off low-margin manufacturing and exports and find new industries for more balanced growth -- many in the interior. But any serious downturn in the factories employing 150 million migrant workers could drag down rural living standards.

Those rising standards were readily evident: Migrant laborers who had returned to Zhaoyuan and nearby villages for the Lunar New Year break could be seen lugging televisions and other trophies of their rising incomes.

"There have been big changes in rural living conditions, but that has not really depended on how good the government's policies have been but on how much rural migrant workers have been bringing back with better wages," said Li Changping, a former rural official who came to fame in 2000 for writing to then premier Zhu Rongji about the suffering of farmers.

"So there's positive change, but the negative risk is: what happens when growth slows,?" said Li, who now works in Beijing as a researcher on rural policy.

BOOSTING CONSUMPTION

Ye Changrun, who works in a bed factory in southern China's huge industrial zone, said his income has doubled to about 2,000 yuan ($300) a month from 1,000 three years ago.

"Working in a factory is hard and it's lonely. But wages are getting better and I think they'll keep going up," Ye said.

"I come home to see my family but I won't come home to work on the land," he added, gesturing at the rice paddies below his home. "There's no money in that."

Nationwide, rural incomes in China rose 10.9 percent in 2010, outpacing the 7.8 percent rise in urban incomes, underpinning efforts to boost consumption in the world's most-populous nation. It was the first time since 1983 that rural incomes had grown faster than those in cities.

But net disposable income is still three times larger in urban areas than in the countryside, and the trend over the past decade shows that gap has widened considerably.

In Jinzhai county and other parts of China where farmers grow cash crops or have more land, incomes from agriculture are higher. But in Zhaoyuan and other mountainous villages, the fragmented patches of fields are not enough to make farming lucrative, even with higher food prices.

"Food prices have gone up, but because we have such small fields, most farmers don't feel they gain much," said Zhu Wenbin, a villager from near Zhaoyuan.

Few villagers had more than a third of an acre of farmland, and many said they had less. "As well, farmers are paying more for food and animal feed and fertiliser," Zhu added. "The (farm) subsidies help, but unless you have migrant workers in a family, you're still poor."

A survey in 2008 of Lu'an, the area in Anhui that encompasses Zhaoyuan Village, found that out of a rural working-age population of 2.9 million, 56 percent worked as migrant laborers. Three quarters of those worked in the coastal export industrial zones of eastern and southern China.

Rural villages are often home only to older people and children migrant workers leave in the care of grandparents. Rising rural consumption is evident in purchases of cars and electric appliances and in house building, "which caught steel firms by surprise as it was significant in 2010," said Stephen Green, head of Greater China research for Standard Chartered Bank, who has closely followed rural development.

Premier Wen has said migrant workers' wages would keep rising steadily.

An economic shock that halts or even reverses the trend could cause serious social and political fallout, said Lu Yilong, a social scientist at Renmin University in Beijing.

"The income for rural growth comes from factories and big cities, so if they fall, the countryside could also face a crisis," said Lu, who grew up in rural Anhui and regularly returns there.

FARMERS SAY "MORE PLEASE"

The government has been trying to avoid such shocks by strengthening the rural social safety net with increased spending on healthcare and basic education, hoping the added security would encourage more consumer spending by poor farmers. Wen's government in 2006 abolished unpopular agricultural taxes and introduced subsidies for farmers.

Those steps have reduced strains in the countryside, according to surveys in 2002 and 2010 by Ethan Michelson, a sociologist at Indiana University, and a team of Chinese researchers.

In a 2010 survey of 2,280 Chinese villagers, 69 percent said their family economic conditions had "improved some" in the previous five years, and 16 percent said conditions had "improved a lot." The remainder reported no change or worse conditions.

For all these gains, villagers feel an enormous gap with most urban residents, whose prosperity they can see close up when they work in cities. Even with recent rural income gains, the gap with urban incomes is stubbornly large.

"I see in Shanghai how big the difference is between city and rural lives," said Zhao Kongxuan, a 49-year-old native of the village who has worked in Shanghai for 15 years. Many residents of Zhaoyuan belong to an extended clan with the surname Zhao.

"It's not an average difference. It's huge," he said, turning to his friends to describe the luxury cars and shopping malls to be seen in China's financial capital.

Farmers are often disdainful of local officials they see as members of a parasite elite that siphon off funds meant for villagers and take their farmland for too little compensation.

Many residents of Zhaoyuan keep pictures of Mao Zedong, the revolutionary who won power vowing to liberate the peasantry, in honored spots above mantles. Despite deadly famine and hardships under Mao, he has survived across much of the rural heartland as a symbol of what is seen as a cleaner, more equal era.

"Wen Jiabao is a good man, but down here at the grassroots...," said Zhang Menglin, a stocky middle-aged farmer who said his mother met Premier Wen on his visit to the village.

"All the money that should go to us should go into our own pockets, not other people's."