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The Neoliberal Sunshine in Northwestern China: A Case Study of Government Sponsored Job Training Programs, Migration, and Poverty Alleviation in Gansu and Ningxia Provinces

Post Series: 2010: Volume 9, Number 2
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Since the advent of economic reform in China, the Chinese government has channeled most of its resources to the development of its coastal provinces. Northwestern China has lagged behind in infrastructure and economic development. The poverty associated with geographical limitations and decades of resource extraction policies in these provinces has created significant economic stagnation in the region. In the 2000 Chinese Census, two thirds of the officially defined poor households were located in western China (The World Bank 2001). Starting in 1999, the western development policies have injected much needed capital into the northwestern provinces and have promoted structural changes in the rural economy in the region. The shift of rural labor out of crop production has been much faster and greater in its magnitude compared with other regions in China (Du et al 2005). Based on the 2009 Western China Migration and Labor Resources Survey (CMLRS), we explore several factors related to rural-urban migration and social stratification in Northwestern China. We find that the migrant labor regime within the neoliberal framework does little to alleviate poverty because the regime has failed to increase capital accumulation in rural villages in Northwestern China. To develop its northwestern region, we suggest that the Chinese government further lessen its control over the hukuo, or household registry system, to allow greater migration between the village and township levels.
The Neoliberal Turn

Chinese reform since 1978 has coincided with the emergence of neoliberal ideology in the world. Since the collapse of the Fordist-Keynesian regime in the 1970s, a new model of production, flexible accumulation, has dominated the global market. As flexible accumulation expanded, high levels of structural unemployment and rapid destruction and reconstruction of skills became prevalent conditions in the labor market. The reliance on part-time, outsourced labor further weakened the strength of labor unions and nation states in relation to the flow of capital (Harvey 1991:150, 170). The ever present drive to shorten the return time on profit in the expansion of a capitalist economy demands the constant compression of time and space in production and consumption patterns. With rapid development in information technology, the acceptable turn-around time for capital accumulation decreased. The subsequent changes in relations among capital, labor, and state-induced manifestations of a schizophrenic condition, where the present triumphed over history, eliminated the sense of continuity and coherence in social lives around the world.

Neoliberal development tends to focus on short-term financial gain instead of long-term stable growth. As capital becomes a circulatory process of commoditization, consumption, and accumulation, the resulting phenomenon of “accumulation by dispossession” leads to an enhancement of the position of elites at the expense of the working class (Dicken 2007; 343). Globally, most countries that adopt neoliberalism have experienced increases in social inequality and the concentration of economic and political power to the upper classes (Harvey 2007:48-50). Neoliberal capitalism invariably creates a debacle in which debt-financed growth has to simultaneously depend on eliminating employment opportunities for efficiency while increasing consumption from the bottom. The end result has been a global shortage of jobs. According to Dicken (2007), in the next decade, the global economy needs to create at least 400 million new jobs in addition to the volatile, flexible (read part-time) positions that already exist (450). In developing countries, massive underemployment is appearing due to the growth of labor that far exceed the limitation of the “Green Revolution” in the agricultural sector (511). In China alone, it is estimated that 15 million jobs need to be created every year as rural surplus labor accounts for close to 62% of the total labor force (Ash 2009).

Migrant Labor Regime

True to the neoliberal ideology, China’s astronomical growth in GDP is based on the exploitation of the “migrant worker regime,” the most flexible employment arrangement possible. Rural migrant workers fill the lower tier of the split labor market. China’s rural surplus laborers fit into the neoliberal framework which “requires a large easily exploited and relatively powerless labor force and is vulnerable to super exploitation” (Harvey 2007: 127,144). Migrant workers tend to work in assembly line positions and in construction while workers with urban registration status enjoy welfare coverage from the state and the upward mobility to join the burgeoning middle class. The enduring division between urban hukuo holders and temporary migrants, in terms of different life expectations, has demonstrated that rural migrants remain excluded from full participation in urban society in both living conditions and social welfare provisions (He et al 2008). Research has repeatedly demonstrated that migrant workers still suffer from a multitude of discrimination and blocked upward mobility in cities across China (Ash 2009, Du et al 2005, and Fan 2008). Compared with the rural population, people with urban registration enjoy significant advantages in resource allocation and life chances. The inequality of opportunity embedded in the hukou system has invariably contributed to severe social stratification between the countryside and the urban areas, which has propelled massive rural to urban migration, especially after Deng’s tour of the southern Special Economic Zones. According to Harvey (2007), the dire condition of the rural sector and the instability associated with rapid urbanization is one of the most serious problems facing the Chinese government (Harvey 2007: 127). It was estimated that from 1995 to 2004, between 5 million and 6 million peasants joined the army of 150 million migrant workers in the city each year (Harvey 2007: 140). And a recent report by the Chinese Academy of Sciences points out that in order to alleviate poverty in rural areas the government needs to relocate “500 million rural dwellers to cities and to facilitate the movement of 600 million city dwellers into the suburbs” (Dicken 2007:227).

Rural migration from hinterland regions to cities in coastal provinces has long alleviated rural poverty in China. The differences in development between the coastal and hinterland region are primarily due to the concentration of Township and Village Enterprises (hereafter TVEs). More than 80% of gross rural income in China comes from non-agricultural activities, and close to 60% derives from rural industry alone (Ash 2009). However, these TVEs are mostly concentrated in coastal provinces. In the northwestern region, the industrial manufacturing sector contributes only slightly over 5% of gross rural income (Du et al 2005). This lack of industrial development has resulted in massive rural underemployment in the Chinese Northwest. In 2004, it was estimated that rural surplus labor levels in Gansu and Ningxia stood at 61.6% and 58% respectively (Ash 2009). The geographical concentration of the underemployed in the countryside creates “contextual inequality” in which the life chances of individual peasants are constrained by the lack of economic opportunities regardless of personal traits (Wilson 2006). In 2004, the average personal income in the northwestern region was less than 48% of that in coastal provinces (Ash 2009). This pattern of social stratification is even more profound when rural areas are included in the comparison. In 2004, net rural income in eastern China was 91% higher than that of western China (Du et al 2005).

Migration, Capital, and Poverty Alleviation

The connections among local migration policy, migrants’ remittances, expansion of social networks, and the development of local economies affect patterns of migration within migrant sending communities (Du et al 2005). In Northwestern China, pressures of population on limited arable land and the increasing arid climate push the local ecological system to critical thresholds. Perplexingly, numerous surveys since 2000 indicate that the northwestern region has the lowest percentage of rural to urban migration compared with other provinces in China, even though western development policies have drastically improved infrastructure. Existing literature on migration and stratification often involves close examination of capital available to people living in different social contexts. According to Bourdieu (1986), capital can be viewed as resources accessible to individuals to facilitate social action (241). Different forms of capital are interconnected and are translatable into each other. Possession of one form of capital facilitates and enhances the acquisition of other types of capital. Social stratification among different sectors therefore cannot be alleviated simply by increasing the human capital of the bottom while opportunity hoarding and disparity in political power remain. As the state bureaucrats and rogue capitalists consolidate political representation, the increasing rural-urban divide and disparate regional development have become pressing issues in regards to the stability of the Chinese neoliberal system in Northwestern China.

To alleviate the severe poverty and to ameliorate regional disparity, in 2004, the Ministry of Agriculture initiated the “Sunshine Project” to provide job training programs to potential rural migrants in the Northwestern region. In some poor counties designated as models for migration of surplus labor, the county governments go beyond providing information for employment opportunities or job training. They are responsible for directing potential migrants to specific industries and establishing national “brand awareness” for their migrant workers. Government-sponsored job training can be conceptualized as a form of social capital that generates human capital in each migrant worker. This poverty alleviation measure is a good example of the top-down mobilization often employed by developmental states in the neoliberal system. Therefore, it is interesting to examine how intervention by the state into the labor market affects patterns of migration and social stratification 10 years after the initialization of the western development policies.


We used data from the 2009 Western China Migration and Labor Resources Survey (CMLRS) to examine the effects the western development policies exerted on migration patterns and rural economies in Northwestern China. The CMLRS covered three western provinces: Sichuan, Gansu, and the Ningxia Hui Autonomous Region. It was conducted from April to July 2009 and sampled 741 households and more than 3,400 individuals in these provinces. For the purpose of this study, we conducted bi-variate correlation analyses on data from Gansu and Ningxia. We hypothesized that:

Those who received more education and government-sponsored job training were more likely to migrate. We wanted to explore whether the infusion of resources via top-down mobilization of the neoliberal state actually increased human capital and provided chances of employment for each migrant worker. In other words, can interventionist measures lessen the rural-urban divide, which has long inhibited the formation of a unified labor market in China?

Migrants with higher education or those receiving government training were more likely to have higher personal income and send more remittances to their households. We wanted to study whether investment in human capital through from top-down mobilization actually benefited individual workers and migrants originated from rural villages in Northwestern China.
Individuals from ethnic minority counties were more likely to migrate and to rely on personal networks to obtain information on employment. Given the unique ethnic situation in Northwest China, we wanted to find out whether the migrant labor regime was embedded differently in the ethnic context from that of the Han community and how this difference might influence patterns of migration.

Results from the bi-variate analyses are somewhat consistent with our hypotheses. As expected in Gansu and Ningxia, individuals between the ages of 14 and 60 are more likely to be associated with migration. Notably, government-sponsored job training is significantly associated with migration. In fact, government-sponsored job training appears to be the most important variable in the preliminary analyses. From the cumulative causation theoretical perspective, government-sponsored training can be treated as a form of social capital which facilitates migration. The training, network, and organization provided by the county government, significantly increased the human and social capital of individual migrants. The state’s policy consequently represents a major source of capital influencing migration patterns in China. According to Zai et al (2008), the effect of migrant social capital on migration is not necessarily uniform across settings and may be shaped by public policies in the sending or receiving community contexts. The clear division in our data in migration patterns between counties with and without officially sponsored migration policies clearly supports the literature

Table I. Kendall’s Tau b Coefficients

Age Gender Education Migration Government Sponsored Job Training
Age 1.00
Gender .029 1.00
Education .424** -.171** 1.00
Migration -.321** .167** -.203** 1.00
Government Sponsored Job Training -.308** .17588 -.198 .792** 1.00

** Coefficient is significant at .01 levels (2 tailed). (n = 2,351)

A negative association between government-sponsored training and income and remittance is slightly perplexing. A negative association between education and migration is also unexpected. It appears that government-sponsored job training and education were significant only when it comes to the decision to migrate. The association between government-sponsored job training and migration is the strongest in the binary analyses. As soon as individuals migrate, education and government-sponsored job training seem to have weak or no relation to income or remittance. The data therefore support hypothesis one but reject hypothesis two. The great majority of people in rural areas are not able to finish high school (Wu and Trieman 2007). They often become migrant workers after junior high or attend vocational schools with questionable learning environments (Fan 2008:97). Wu and Trieman (2007) state that contrary to past research indicating high upward mobility in Chinese society, there is actually a strong downward mobility in the rural sector. The limited upward mobility in rural areas is only available to those who scored high in college entrance exams and have the means to attend universities to switch their hukou to urban status

Table II. Kendall’s Tau b Coefficients of Migrants

Education Government Sponsored Job Training Income Remittance
Education 1.00
Government Sponsored Job Training .037 1.00
Income 1.43** -.304** 1.00
Remittance .041 -182** .578** 1.00

** Coefficient is significant at .01 levels (2 tailed). (n = 2,351)

Due to the underdevelopment in the rural economy in the region, limited career options are available to individuals with rural hukou. Government-sponsored job training becomes an attractive alternative to individuals who do not have the opportunity to obtain a high school education and beyond (Knight and Tueh 2009). However, government-sponsored job training and government-organized migration typically are focused in construction, manufacturing, and low-end service sector jobs (Snyder and Chern 2009). These jobs provide little upward mobility in the emerging “hourglass” economy and generate little return on investment in human capital such as education and job training (Wilson 1997:224). Fan and Stark (2008) further state that without regulation, a government’s effort to increase educational expenditure and thereby the number of skilled workers may result in decreased wage rates in both rural and urban areas. Our findings reflect the literature on the low return of investments in migrants’ human capital (Snyder and Chern 2009).

Meanwhile, the literature suggests that individuals who remain in their place of origin generally come from backgrounds with household incomes considerably higher or lower than the poverty line (Du et al 2005). Those who remain and have the access to work in non-agricultural jobs such as in local TVEs and the retail sector tend to have higher net incomes than migrant workers (Snyder and Chern 2009). Our findings support this pattern as well. In addition to the effects of the hukou system, the negative association between education and migration can be preliminarily attributed to the economic and employment patterns on the local level. The different outcomes in income between individuals may be related to whether individuals have the means to attend high school or are constrained to government-sponsored training. Even when migrants received government-sponsored job training, the aforementioned correlations suggest that they are more likely to be associated with lower incomes and remittances. Interestingly, the negative association between training and income is stronger among those who stayed (b=-.916**, r=-.925**) than those who migrated (b=-.304**, r=-.406). In other words, those who received government-sponsored training and failed to migrate may have the lowest income compared to migrant workers and people who attended high school and stayed. Thus, the data indicate that there is a strong difference in upward mobility between those who have the opportunity to attend high school and those who are directed to the vocation training track.

Our findings on gender corroborate with the latest literature on migration and stratification in China. According to Fan (2008), young males and females in rural areas tend to migrate at a similar rate even thought they tend to go into different employment sectors (47). Since the loosening of the hukou policy, there is also an emerging trend of married couples migrating to the same destination within a short period of time (He et al 2008). Contrary to the literature, our analyses find no significant association between distance to a major city and migration. County governments’ involvement in organizing migrant labor may be a factor as many of the organized seasonal migrant workers in Ningxia and Gansu are sent to petroleum production sites and cotton fields in Xinjiang and in Qinghai (Interview Notes). We are surprised to find that there is no significant association between migration and ethnicity and ethnic networks and employment opportunities. We speculate that lineage and local networks may be stronger social capital than ethnicity in social organization in the Chinese rural society.


The data show how government-sponsored job training is highly associated with the decision to migrate. Interestingly, the analyses show education is negatively associated with migration, which can be attributed to the skewing effect of the hukou system and patterns of job allocation in the local political economy. We find that once individuals migrate, education and government-sponsored job training seem to have weak or no relation with income or remittance. This result suggests that migration propelled by government-sponsored job training can be a short-term solution for surplus labor in rural areas of the northwestern region; however, it produces little progress in the long term development of the local economy. Therefore, we believe that the migrant labor regime within the neoliberal framework does little to alleviate poverty in Northwestern China. Job creation and investment in TVEs in the rural area may be a better approach to poverty reduction in the region. However, given the fragile condition of the region’s ecology, industrial development will likely lead to further desertification and pollution and therefore limit the human and social capital available to local residents.

Based on our findings, we believe that development driven by unconstrained GDP growth as typified by the migrant labor regime is detrimental to the long term stability of the region. The unique ecology and ethnic diversity of Northwest China cannot sustain the external and social cost often associated with neoliberal policies in developing countries. In addition, the post-socialist institutional transformation in the region is severely behind the coastal provinces. The regional economy is dominated by state-owned enterprises. Private enterprises are weak and congregate in the service sector. This uneven distribution of resources and market opportunities inhibit innovation and tend to encourage rent-seeking behaviors from high level managers and bureaucrats who, as invested actors, are likely to continue the track of unsustainable development.

One alternative is to have the state provide tutelage and support for a circular economy by encouraging government R&D investment and providing tax incentives to the renewable sector in Northwestern China. Instead of the continued reliance on resource extraction and on energy/labor intensive industries as streams of revenue, regional governments should gradually shift their development strategy to green industries at the township level by utilizing land resources and surplus labor from rural areas. To increase capital accumulation in rural areas, the state should further lessen hukou registration by encouraging urbanization as the township level. Currently, to transfer a hukou from rural to urban status, one has to give up the right to lease farm land in one’s original village. The circulatory nature of migration is often interrupted and consequently remittances dwindle as migrants opt to stay and spend their income in cities where they are employed. The exodus of working age people creates a vicious cycle of poverty as people who stay behind cannot gain income from migrants’ consumption and the rural areas lose the opportunity to accumulate capital. The government can consider allowing recently urbanized peasants to keep their land-lease rights, thus encouraging migrants to work and stay in adjacent townships and stimulating capital flow toward surrounding villages. Lastly, given that sustainable development has become a major theme with the 12th Five Year Plan, the central government in Beijing needs to reduce differences in policy implementation for the central, regional, and local levels to avoid the agency issue in governance, which has long exacerbated social stratification and polluted local environments in China.

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