Dragon Boat Festival. The county town is doing its best to sleep away the sultry afternoon, but along the empty, central streets the peace is broken by sporadic chatter from the town's public address system. Huoshan is still wired up for centralised propaganda. Yet it is not political slogans that emerge from the fizzing loudspeakers now, nor even homilies on family planning. Today the messages are all paid commercials: try this beer; buy this cell phone or pager, that digital video.

The DVD seems an optimistic pitch, and not just because this is a holiday. For, despite its relative proximity to the coast, Anhui Province has long been one of China's poorer areas, although its relative position has improved slightly over the last decade. In 1990, it ranked 24 out of 30 provinces in terms of gross domestic product per capita, and the United Nations gave it a 'human development index' rank of 23 out of 30. By 1997 it had crept up to 20th place in both rankings.¹ (1998 GDP per capita in the province was USD 580 compared to USD 780 for China as a whole; average net rural incomes were USD 215 compared to USD 248 nationally).²

In short, this is a somewhat poorer than average, but on the whole fairly typical sort of place. Middle China. Not the prosperous coast, nor the least developed west but, figuratively and literally, somewhere in between. Which does not make it a place of no consequence -- for, it is worth remembering, it was typical, in-between Anhui which pioneered the de-collectivisation of agriculture in the late 1970s, when communes in Fengyang county decided to divide their land between individual households.

More recently, however, the province's modest recuperation of relative fortunes has been driven not by farming but by industrialisation. In 1988, agriculture was still, by a slight margin, the largest economic activity of the province, whilst manufacturing and service industries were underdeveloped by national standards. Over the next ten years, the value of agricultural output trebled, but manufacturing and service industries both grew six-fold, tipping the balance towards a 1998 GDP composition of 25% for farming, forestry and fisheries, 51% for manufacturing, mining, power and water utilities, and 24% for service industries (mainly, transport, telecoms, catering, wholesale and retail trades).³

This growth pattern -- the steady shift in economic weight from agriculture to manufacturing and, latterly, services -- mirrors national trends, although in Anhui the process got under way in earnest around a decade later than most points to the east. (And it has hardly started at all in many points to the west.)

Huoshan County also typifies the trend, with a GDP composition that is now very close to that of Anhui as a whole. (See linked article for a pop-up table of county statistics) Located in the west of the province, close to the border with Hubei, the county has enough archetypal Chinese features -- rice paddies, bamboo, silkworms and tea -- to be a strong candidate for a picture postcard shoot. Moreover, in terms of both environment and development, Huoshan presents a striking microcosm of China as a whole: in the east, the land is flat and populous, agriculture is intensive and almost entirely irrigated, and the sides of the highway are dotted with factories; whilst in the west lie the Dabie Mountains (rising to 1,774 metres above sea level), where picturesqueness and poverty coexist. This makes Huoshan a highly pertinent place to ask how current development processes are working, and how their benefits have been spread.

The picture is mixed. According to Director of the County Poverty Alleviation Bureau, Jin Shengru, as much as half of the population was living below the official poverty line in 1986, when Huoshan was first designated a national, 'poverty county.' The proportion of poor people at first fell rapidly, to 'around 20% by the early 1990s'; but a survey conducted by the Bureau in 1995 showed that 15% were still living in poverty.

This suggests that there was a slow-down in poverty reduction rates at the very time of peak industrial growth. Provincial figures show rapid expansion of township and village 'collective' enterprises in the period 1990-1995, and Huoshan's recorded industrial output grew by no less than 800% over this period.⁴ Yet industrial growth, even at such breathtaking rates, was evidently not sufficient to eradicate rural poverty.

County Vice Governor, Hu Chuandao is nonetheless convinced that industrial development has a key role to play in poverty alleviation: 'Industry creates demand for agricultural products, as well as providing employment. We hope to see the rural population decline by getting people into factories -- inside the county, but also outside. And the fewer people left behind in the remote, mountainous areas, the easier it will be to protect the environment of those areas too.'

Yet county government figures show that to date 74% of Huoshan's labour force remains on the farms, producing only 25% of the county's GDP. Moreover, it is not clear how many of the jobs created in the county's industries are going to local people. There is very little data on this, but the Anhui Province Statistical Yearbook for 1999 records that 85% of the 'floating [i.e., migrant] population' in Lu'an, the principal city of the prefecture to which Huoshan belongs, come from outside the province.⁵ (Broadly similar figures are reported for all the province's cities.)

This is not to say that all of Huoshan's rural labourers remain wedded to the soil: but migration patterns are extremely complex, and young people in Huoshan keen for long-term off-farm employment may well be more likely to look for opportunities outside the province.

A 1997 study, undertaken in preparation for a Dutch government funded poverty alleviation project which has since started in nine townships in the mountainous west of Huoshan, put the able bodied rural labour force in the project area at 73,645.⁶ Of these it was said that 5,150 (6.9%) took local waged jobs during the agricultural slack season, and 4,100 (5.5%) had migrated out of the county for more than one year. Most striking, however, was that fully 19,861 (27%) of those left behind were 'surplus labour' -- that is, effectively unemployed. (However, this surplus of labour is not distributed evenly; indeed, in many of the poorest households in the upland areas, labour shortage, owing to sickness or disability, is a major contributor to household poverty.)

Vice Governor Hu is without doubt right to see urban demand for labour as an important means of easing some of the pressure of rural poverty and under-employment; but this seems likely, for many years to come, to be more of a safety valve than a definitive solution. To be sure, even the poorer townships of Huoshan sport occasional, shiny, tiled houses, built with remittances from absent sons and daughters; and the infusion of cash from 4,100 absentees is no doubt a useful flip for the local economy. But short to medium term rural development and poverty alleviation strategies will still have to rely largely on improving rural livelihoods and conditions.

This will be an uphill struggle. In the Dutch government project area, land for food and cash crop production ranges from 3 to 6.5 mu per household, with an average of 4.88 mu (0.33 hectares). According to calculations by the project design team, in the 15% of villages that are located between 50 and 250 metres above sea level, families have produced the equivalent of just 153 kilos of grain per capita per year from this size of holding, leaving food shortages for around two and half months. About 20% of the project villages are located between 250 and 500 metres, where colder conditions lower yields, leaving families vulnerable to food shortages for upwards of four months per year. Fully 64% of the project villages are located above 500 metres, where grain yields dip even lower, leaving shortages from four to six months a year.⁷ At all elevations, grain and tuber production is generally supplemented with cash crops (notably tea, bamboo, water chestnuts and mulberry for silkworm production) that provide some income for buying food in the hungry months. However, the project design document notes, in order to achieve even present grain yields, farmers generally require substantial amounts of purchased fertiliser, which drains cash income but brings no cash return.

Improving food security in such circumstances is no small task. A 1997 report by the World Food Programme outlining a joint project with the International Fund for Agricultural Development in the central, upland area of Huoshan (this project has also since started - see box), concluded that: 'Attaining food self sufficiency through farm production is an elusive objective for most households.' Only the lowest elevation farms, the report considered, could become grain self sufficient; those in the middle could hope through WFP/IFAD project activities to 'see their food security increase from 4 months per year to about 8 months, while the high elevation model would only increase food security from about 2 months to 4 months'.⁸ Much of the WFP/IFAD project's efforts are aimed, therefore, at improving cash incomes, and this is also true of the Dutch government project.

This is made more difficult for both projects, and indeed for Huoshan's farmers, by falling prices of many cash crops. Raw silk dropped from CNY 230,000 in 1993 to CNY 160,000 in 1999. Bamboo is reported to have dropped by around 20% over the last three years, largely owing to the fact that construction gangs on Chinese building sites are switching from bamboo to steel scaffolding. According to Jiang Xisheng, project officer with the China-Netherlands project, high quality tea has fallen from around CNY 120 - 160 five years ago, to around CNY 60 per kilo now.

According to Vice Governor Hu, the county contains 1,460 different types of medicinal herb, and this seems an important area of potential cash crop development, particularly in the poor south west of the county. Indeed, China-Netherlands project staff report that Manshui township was once famed throughout the region for its traditional Chinese medicines, and is still the site of a weekly market. Much of the specialist knowledge and skills were lost during the collectivised years, when the yi liang wei gang policy ('grain is the backbone') saw most cultivated medicinal herbs taken out of production; but there has since been a gradual revival of high value medicinal crops such as tian ma and shi hu , for which demand appears to be good. However, Chen Shihong (Party Secretary for Taiping Township, adjacent to Manshui, reports that this year prices of some medicinal herbs are also down, in some cases by as much as half. One local grower of yebaihe (a bulbous medicinal plant that can also be eaten, and is a popular speciality dish in Shanghai - told us that this year he expects his crop to fetch only half of what it would have been worth two or three years ago.

The Dutch funded project does not use a single poverty line to define its client group. Identifying the main causes of poverty as low availability and productivity of land, poor health, high farmer risks and poor infrastructure, it assesses 75% of the population in the project areas as poor by the following criteria:

the poorest (10%) with illness, low labour availability, no money to pay school-fees/drugs, grain deficits for more than 6 months . . .
the very poor (15%) with a grain deficit of 3 to 6 months, low labour availability, major problems in paying school fees, and income per capita of less than CNY 350 per year (in 1992 prices) . . .
the poor (50%), which can make no investments, can just pay school fees but may fall back into to the previous group at any moment through floods, drought or illness. Their grain deficit is less than 3 months per year.'
In addition to these enduring problems, the Dutch project design team found very high levels of indebtedness. In the project area, a total of CNY 100 million was owed on poverty alleviation loans; 30% of all households had overdue loans, averaging CNY 1,871. Rural Credit Cooperatives in the project area were owed CNY 33.5 million, and around 30% of households had overdue loans averaging CNY 675. The project design document concluded that 'the majority will never be able to repay these loans. It is questionable whether the households are fully aware of the loan principles.' Indebted households would not be eligible for further loans, and so would lose access to this potential ladder out of poverty.

A multi-faceted understanding of poverty implies a multi-sectoral approach to alleviating it. Not surprisingly, therefore, the USD 5 million Dutch project has embraced a wide range of activities since it began in 1998. It has helped build or repair water supplies, small scale irrigation works and rural roads, and contributed wages for labourers to work on paving 88km of an inter-provincial highway to Hubei. It has supported the refurbishing of health facilities and schools, paid school fees on behalf of children from the poorest households and funded in-service teacher training, and sponsored a pilot medical insurance scheme. (See linked article) It has helped to improve facilities and training for agriculture, animal husbandry and forestry extension staff. It is promoting environmentally efficient technologies for diversified production (such as cardboard frames for raising silk worms, and a technique developed by the Anhui Science and Technology Commission for growing mushrooms in bags wood chippings). It is working with the Poverty Alleviation Bureau to develop new ways of targeting and administering poverty alleviation loans, on a quasi Grameen system of group responsibility and mutual loan guarantees. It has sponsored study tours and training for local enterprise managers (with a view to improving leadership skills), and is exploring collaboration with a local vocational school to develop courses in basic construction skills.

In short, there is much to be praised, and nothing that one would presume to blame on the evidence of so short a visit as chinabrief was able to make. One aspect of the Dutch project worth high-lighting, however, is a series of associational experiments.

Notable among these is the support for water users associations to improve irrigation management. (See linked article) Another is the establishment of a number of village level Community Development Funds. The project has donated CNY 10,000 - 15,000 each to ten such funds, managed by village level committees. These use the funds to make short term loans to individual households, to a maximum value of CNY 1,500 per loan. (This component of the project is distinct from the work with local government on delivery of Poverty Alleviation loans). According to Liu Honglian, who oversees this aspect of the project, peer-group pressure in such a micro project helps to ensure prompt repayment. Moreover, the community decides the uses to which the loans may be put. In one community, the management committee made all loans conditional on observance of a number of 'eco-forestry' rules and principles regarding land use.

The project has also supported the setting up of a tea growers association in the project area, to encourages the spread of technical and market information. This collaborates with a county level tea marketing association, which promotes the distinctive local, yellow tea beyond the county, advertising it among other means through the world wide web (hstea.hongnet.com, and hstea.yeah.net).

One thing Tim Zachernuk, co-Director of the China-Netherlands Poverty Alleviation project, particularly likes about his job is the flexibility written into the design of the project. The budget was not entirely pinned, in advance, to a theoretical 'log. frame' specifying activities and outputs: rather, the project design document enumerates principles and methods, but leaves much of the detail of specific activities to be worked out in collaboration with local partners. This allows the project to build upon the growing knowledge and experience of the staff team, the inputs of national consultants, and deepening relations with partners.

At the same time, however, this structure perhaps encourages county and township government agencies to treat the project as a local development foundation, to which they can apply for help with specific micro-projects as they arise: a water pipe here, a school refurbishment there. This is hardly surprising as, all too clearly, there are desperately few resources for holding together basic infrastructure. But it is natural to ask whether government will be able to take up the slack as the project phases out.

Governor Hu expects that poverty in Huoshan will be effectively eliminated 'within two to three years'. Poverty Alleviation Bureau Director, Mr. Sheng, says the numbers of poor have now fallen below 4% -- and that poverty is almost exclusively concentrated in households with adults unable to work because of old age or disability. (He adds, however, that the figures collected at county level were adjusted downwards by higher levels 'to make them more accurate').

Whether this is wishful thinking (or wishful counting) remains to be seen. Either way, lasting poverty eradication and/or prevention will almost certainly require not just getting individual households on their feet, but also ensuring that local government has the capacity to plan, organise and deliver a reasonable level of basic services. International projects can 'build institutional capacity' both implicitly through contact, discussion, partnership and joint exploration of new concepts and ways of working (including, 'participatory' models) and explicitly through 'human resource development'. With the exception of Mr. Zachernuk, all staff on the Dutch project, including another co-Director, are Chinese, and most are from Huoshan. The WFP/IFAD project is also delivered through Chinese project management offices under the jurisdiction of the Ministry of Agriculture hierarchy. Even anticipating a high 'attrition rate' of skilled staff leaving for greener pastures, it is likely that others will remain working with government well beyond the life of the project. In several ways, therefore, these projects may strengthen the future ability of local government to act effectively.

But it also needs financial, not just human, resources. Like many poor counties -- and despite central government expostulation and prohibitions -- Huoshan is running a fiscal deficit. (Of about 25% per year from 1996 to 1998). Yet government revenue has been steadily increasing: industrial growth in the plains may not have raised agricultural incomes in the hills, but it has raised the income of the country treasury. How much of that should be invested in stimulating more new trade and growth, (some of which might eventually trickle out to the hills) and how much should be spent making sure that the poorer townships can maintain basic infrastructure and deliver basic services? It is not, of course, a question only for Vice Governor Hu and his colleagues, but for the whole of China.

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About the article:
Our thanks to staff of Huoshan County Government, the China-Netherlands Poverty Alleviation Project, and the World Food Programme Beijing office. All were generous and patient with their time.

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¹ China Human Development Report 1999: Transition and the State. UNDP, Beijing. Note that owing to the administrative separation of Chongqing from Sichuan, rankings for 1997 are out of 31, as opposed to 30, 'provinces, municipalities of autonomous regions'.
² China Statistical Yearbook 1999, Table 3-9 and Table 10-17
³)China Statistical Yearbook, 1999, Table 3-9
⁴Anhui Statistical Yearbook 1999, Table 13-24
⁵ Anhui Statistical Yearbook 1999 Table 4 -15
⁶ China Netherlands Poverty Alleviation Project Design Document, Section 2.3.4 The document excludes 'surplus labour' from the figure for 'total rural labour force'.
⁷ All land and yield figures are given in China Netherlands Poverty Alleviation Project Design Document Section 2
⁸ Project Document for China 5796, WFP, December 1997.

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