Report summary:

Yunnan’s position at the periphery of the Chinese empire enabled it for many centuries to remain culturally heterogeneous. Its vast mountain ranges, plunging gorges and forests were largely peopled by tribes that, in some cases, had established homes there as refugees from expanding Chinese civilisation in the east and in the lowlands. Today, the province remains China’s most ethnically diverse. Twenty five officially recognised ethnic minority groups comprise one third of the total population of 44 million. This ethnic diversity is matched by the natural biodiversity inherent in Yunnan’s varied—but almost invariably mountainous—landscapes.

The first thirty years of Communist rule saw greatly increased state penetration in
Yunnan. The minority peoples were studied, classified and largely collectivised, mostly in forms of subsistence agriculture that reflected national diktats more than local conditions and knowledge. Natural resource extraction was scaled up with the development of timber, mining and smelting, rubber and tobacco industries under state monopolies. During this period the state also oversaw the widespread extension, for the first ever time, of basic health and education services. Nevertheless, in 1979, fully half of the rural population (and three quarters of rural women) remained illiterate. During most of the subsequent 25 years of ‘reform and opening’ Yunnan has again appeared to be at the periphery of the momentous economic and social changes emanating from China’s coastal regions and political centre. Agriculture was de-collectivised—meaning, in most cases, a return to smallholder subsistence—but the state has remained the only player in many parts of Yunnan’s economy, and the dominant player in virtually all parts. There has been relatively little international investment and a private sector has been slow to emerge; but there may now be significant change on both counts, given recent liberalisation of tourist and mining industries. Until now, however, urban unemployment and poverty have been rising steadily, with retrenchment and closure of state owned enterprises resulting in the loss of some 630,000 urban jobs.

The provincial government sees the economic future as resting on four pillar industries:Agriculture, Hydropower, Mining, and Tourism. The government has been investing massively in communications infrastructure—road, rail, air and river navigation—to promote trade, market development and tourism. Trade with South East Asia is growing rapidly, as are Yunnanese business interests and Chinese government aid projects in neighbouring countries. To date, however, the benefits from two decades of steady economic growth have been distributed highly unevenly. In Kunming, whose streets are now choked with private vehicles, luxury department stores and night clubs cater to an urban elite enriched by trade and growth in the ‘pillar’ industries. But none of the latter have yet generated substantial employment growth. The number of people working the land has increased, but most of them have very limited resources and opportunities for diversification. Per capita rural incomes are only 65% of the national, rural average, and more than 18 million people in the province live in areas where annual GDP per capita is CNY 4,000 (USD 500) or less. GDP per capita ranges across administrative boundaries from CNY 16,352 per year in Kunming—roughly twice the USD 1,000 ‘middle income’ threshold—to just CNY 2,370 in Zhaotong, resoundingly below that threshold.

Yunnan has a relatively low level of urbanisation, with few major cities outside of
Kunming. Existing cities are now growing fast, however, swollen by rural migrants who supply low-wage labour in booming construction trades and service industries. For the present, despite its own shortage of jobs, Yunnan appears to be a net importer of labour. Many rural Yunnanese do migrate, mainly within the province, but there is substantial evidence that the poorest and least educated—among whom ethnic minority people figure prominently—are least likely to leave the village and least likely to thrive if they do so. The rural poor—including a high proportion of ethnic minority people but also the mainly Han population of the poorest prefecture, Zhaotong—have also been hit hardest by the growing costs to families of compulsory education and by the effective privatisation of health care services. Fiscal decentralisation, devolving responsibility for provision of basic services to local governments, has proved regressive: the poorest areas receive least public investment, and are least able to provide adequate coverage; and the poorest people, supplying the cheapest labour to keep the economy going, are least able to pay. Nevertheless, government efforts, aided by charitable crusades to secure cash contributions from ‘social forces,’ have ensured the continued expansion of basic education. The erosion of public health services for the rural population is at least as grave in Yunnan as in other parts of western China. The overwhelming majority of rural people have no health insurance—and recent efforts to remedy this have not proved particularly successful—and must pay out of pocket for all health expenditures. This sorry tale is reflected in an apparent rise, from 1982 to 2000, in rural infant mortality. Ethnic minority women and children almost certainly bear a disproportionate burden of disease but have seen the most serious dwindling of preventive and primary health care services, as facilities, equipment and expertise are increasingly concentrated in better-off and better-insured urban health care markets.

Meanwhile, the much greater flows of goods and people between localities as a result of market reforms, combined with widespread, continuing poverty, has created the conditions and the cover for illegal trade—in drugs and people—also to flourish. Up to 60% of the opiate production in South East Asia’s ‘Golden Triangle’ is thought to pass through China, much of it trafficked through Yunnan, and injecting drug use has grown along the trafficking routes, sparking an HIV epidemic. The commercial sex industry has developed visibly in recent years. Yunnan almost certainly has at least 100,000 sex workers, around half of whom migrate to the province from elsewhere in China. Surveys in the late 1990s showed high prevalence of sexually transmitted infections among these sex workers, and quite low, or at least inconsistent, rates of condom use. As the government of China has increasingly acknowledged the AIDS epidemic, Yunnan has become, with international assistance, a kind of national laboratory for developing and testing responses. However, numerous implementation problems remain, and harm reduction strategies are still blended with punitive approaches that may make it harder to reach important constituencies. It also seems probable that HIV prevalence is still significantly under-reported. Opening and reform has also seen the re-emergence of three kinds of human trafficking: procuring young women for marriage and childbearing; procuring young people for commercial sex and other exploitative forms of labour, and procuring infants and young children for adoption by purchase. Fortunately, the police seem to have realised that cracking down on vice is not the only, or necessarily the most effective, response to these social scourges, and have shown interest in preventive approaches at least as a complementary measure. However, prevention programmes will require more inter-regional and inter-departmental cooperation than appears as yet to exist.

The good news is that for the last ten years government revenues have been rising
rapidly, at a faster rate than GDP growth, providing more resources with which to face this daunting array of social and economic ‘challenges.’ Central government transfers for health and education services and for HIV/AIDS prevention and care are also rising. The nature of Yunnan’s economic development is such that market forces alone are unlikely, for many years to come, to create income and livelihood security for all. The well-being of much of the population will largely depend on government capacity to spend its growing revenues wisely, investing in development and social protection of the province’s human resources, and providing greater policy and technical support for the smallholder agriculture on which so many people continue to depend.