Informal sector – Xiao Wang (小王)

Informal sector - Xiao Wang (小王), Elosua Miguel

 

This photo was taken in Shanghai in September 2013. Motorbike drivers wait for customers at the entrance of the Shanghai Exit-Entry Administration Bureau. A ride to the nearest subway usually takes five minutes and costs between 8 and 15 RMB, depending on the negotiation skills of the client.

Xiao Wang (left) has been doing this job for seven years already. In one day he can make more than 150RMB, around 4500RMB per month, well above the average salary of a migrant worker (in 2009, 30% of migrant workers did not earn more than 1100 RMB per month)1, and the equivalent of a taxi driver’s average income, although net of taxes. He came to Shanghai from the neighbouring Anhui province 10 years ago with his wife, who works as a domestic helper (baomu – 保姆,or ayi  阿姨,which means “aunt”, a common term for domestic helpers in China).  Xiao Wang worked in a factory first, only to become an entrepreneur when he made enough savings to buy a motorbike. Since he could not afford to buy a Shanghai licence plate (the Government of Shanghai runs auction sales and the auction price of a plate reached more than 90,000RMB in 2013), he bought and registered the motorbike in Anhui (vehicles registered elsewhere cannot circulate on elevated highways during peak hours). Among his fellows, there are also many Shanghai locals who joined the informal sector after the massive layoffs that took place as a consequence of the restructuring of State Owned Enterprises (SOEs) in the mid-1990s.

The couple have a daughter, who is eight years old now and lives with Xiao Wang’s parents in Anhui. They send money every month to pay for her education. For a long time they could only travel back home for the Chinese New Year, but they can afford to do it twice a year now. Communication with their daughter is done through weekly telephone calls. New technologies and smart phones are still absent from their lives.

Back in Anhui, they had land to cultivate, but income from land was meagre. The agricultural tax had not been abolished yet, and agricultural allowances were paltry. Therefore, they decided to leave the land idle and migrate to the booming coastal city of Shanghai, like many other farmers from this province. After a few years, they rented out the land to another villager for 300RMB per mu (1 mu = 1/15 ha.) a year. This does not represent an important sum to the household economy but its significance is tied to the interest in keeping the land. Leaving land idle may cause them to lose it in the next round of land distribution in the village, something they cannot accept. As it is often the case with migrants in China, their heart still belongs to their hometowns. There is no sense of identity with the host city. This mentality contrasts with other inflow cities like New York, where migrants tend to identify with the city almost instantly. One of the main reasons for this lack of identification with the big city lies in the hukou system, which remains as a stumbling block to the full integration of rural citizens. Since migrant workers do not have access to urban welfare benefits, they are trapped mid-transition from rural to urban.

Xiao Wang is part of this group of migrant workers – approximately 150 million – who work in the informal sector: they lack a formal job, formal housing, and formal citizenship. They have to prepare for any eventuality, something that has made them China’s biggest savers group. Granting full citizenship to migrant workers would remove an important obstacle for upward social mobility and respectability. It would also increase tax revenues and would help the country stabilise the economy, encouraging migrant workers like Xiao Wang to reduce savings and increase spending.

  1. 2009 Nian nongmin gong jiance diaocha baogao, National bureau of statistics of China, http://www.stats.gov.cn/tjfx/fxbg/t20100319_402628281.htm (accessed 3 September 2013 []

Miguel Elosua

Spanish qualified lawyer; PhD in Chinese Law. UrbaChina Research Officer. Has lived in China since 2006.

More Posts

One thought on “Informal sector – Xiao Wang (小王)

  1. Angel de la Puente

    Hi Miguel, good article. I think the hukou system, does not help China at all. Freedom of movement will change the country to better ( I do not know very well China, but I think that is a general principle that may help any country).

    About the informal sector, is the best way to improve your life when there are many regulations or taxes that does not allow develop your entrepreneurship.

    A good level of savings, is very important for a country, otherwise you would end like the Western world.
    Please do not look to us in China for economic measures. I will love to move to China, and I hope to
    find a prosperous country.

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *