The book Invisible China: How the Urban-Rural Divide Threatens China’s Rise, by Scott Rozelle and Natalie Hell, and published by The University of Chicago Press. Scott Rozelle, since the early 1980s, Stanford University’s top expert on economics and politics of inequality, has been studying poverty. He, with Natalie Hell’s assistance, has spent most of the past ten years studying the Chinese economy.
No nation with high school completion rates below 50% has ever achieved high-income status.
Both have analyzed the success of China’s many efforts to combat poverty and examined the aspects of the nation that foreign journalists, businesses, and even most Chinese residents rarely see. The important subject of what China can do to prevent economic stagnation is addressed in this book. From Chapters 1 to 7, the book presents the author’s complete argument and empirical evidence supporting the main thesis, while the Conclusion offers the policy recommendations.
The book argues that China has had miraculous economic success, leaving millions of people out of poverty in the past few decades, but it does not mean it will continue. China may be nearly the world’s second-largest economy, but its per capita rank is still 75th (World Bank, 2016). China is trapped in a middle-income trap. If it doesn’t take the necessary measures, the situation will be more like Mexico. The factories are leaving because of rising labor costs and the US-China trade war, and every year, 40000 factories are leaving China, eliminating jobs (page 29). The author has blamed the rising demand and China’s one-child policy for the increase in labor costs. Scott and Natalie made a very big claim that around 300 million people could soon be left structurally unemployable because of the high level of unskilled workers.
China has reached its turning point, and low-skill jobs are going to disappear soon. Around 70% of the Chinese labor force is unskilled (page 48). No nation with high school completion rates below 50% has ever achieved high-income status. If China wants to function like a high-income country, it needs skilled labor. China may be in serious peril with its current 30% high school graduation rate (page 5). The author draws an overview of Chinese education and argues that education was not the top priority for Chinese leaders, which is now reflected in the results. Upgrading and educating the upcoming labor force will take more than 45 years (page 72).
Around 70% of the Chinese labor force is unskilled, putting 300 million jobs at risk of structural unemployment.
The book underscores the significant urban-rural divide that resulted in China being trapped in the Middle-Income Trap. Since rural China is not taken into consideration and all the world sees is the developed cities, the authors refer to it as “Invisible China.”. Scott and Natalie also highlight the distinction between the “trapped” and “graduate” nations—the latter of which are those that escape the middle-income trap. Human capital is where the distinction lies.
The rising power still has a lot to do to reach high-income economies. Human capital undermines the progress of Middle-income economies, and they get stuck in a deadly trap. Books argue that Chinese elites performed outclassed, and many companies copied their ideas, but this is not enough, and a handful of companies can’t transition from Middle-Class income to high-class.
The author also highlighted the Chinese government’s growing stress on the importance of education since the 2000s. University graduates are growing at the fastest rate, and many universities are the best in the world. But education is primarily at the elite level, and common rural workers can’t even attend high school, which costs tuition fees. They should make education free for all citizens and abolish urban-rural privileges like the USSR. The Chinese urban-rural divide is higher than that of any country (page 77).
As per the hukou system, Urban children can only attend urban schools, and rural children attend only schools in rural areas. And if the rural family moves to cities, they can’t put their children in urban schools. This is completely against the basic idea of communism, which focuses on equality and the abolition of class differences. The author shed light on vocational schools, but the conditions of rural vocational schools are not up to the standard of cities.
Urban-rural privileges enforced through the hukou system contradict the egalitarian ethos of communism.
One of the key components of human capital is health and education. According to this book, Millions of children in rural China suffer from iron deficiency anemia (page 116). Anemia, vision issues (myopia), and intestinal worm infections are some of the key factors that affect rural children’s education. The book argues that the Chinese government needs to do more for rural China.
Overall, the book goes into detail about China’s issues with the development of human capital. Despite its significance, human capital development is not the only driver of economic growth. There are other elements involved as well, like the development of infrastructure, financial markets, and the presence of effective institutions. We shouldn’t overlook any of those elements when concentrating on human capital challenges. It’s critical to maintain equilibrium among different policy objectives.
Scott and Natalie aim to offer objective facts that demonstrate the existing economic status of China. It cannot be stated, however, that the second-biggest economy in the world is on the verge of going into decline because China has recovered from the COVID-19 pandemic. It makes a significant contribution to the global economy. According to the World Bank, it has entered the upper-middle income category.
China’s current 30% high school graduation rate signals a human capital crisis that could last over 45 years.
Recently, a new rural revitalization strategy has also been established, focused on structural improvements in rural areas to lessen the urban-rural gulf. Overall, the book is full of information and offers significant comparisons between historical and present events in other nations, rather than being limited to China alone. It is a thought-provoking book that specialists and policymakers interested in China’s rise worldwide can read.
Disclaimer: The opinions expressed in this article are solely those of the author. They do not represent the views, beliefs, or policies of the Stratheia.
