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China's Migrants Go Home -- And Stay There

Adam Minter is a Bloomberg View columnist. He is the author of “Junkyard Planet: Travels in the Billion-Dollar Trash Trade.”
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Every year, tens of millions of China's 246 million migrants return home to celebrate the Chinese New Year. It's the world's biggest annual migration, and it typically goes off smoothly. This year, however, something's amiss.

Although the holiday doesn't start until Feb. 8, millions of workers -- especially in the construction and electrical-appliance industries -- have already returned home due to the country's slowing economy. For local governments across China, this is raising a tough question: What happens if these laborers don't go back to work after the holiday?

The concern isn't a new one. In early 2009, 20 million unemployed migrants returned home for the holidays in the wake of the global financial crisis, raising fears of social unrest. Labor riots did, in fact, take place. But most of the unemployed appear to have gotten back to work when China's monster stimulus kicked in later that year.

This time is notably different. Prospects for a 2009-style stimulus are slim. More important, China is on the cusp of a long-term trend of reverse migration back to the countryside. This week, the National Bureau of Statistics reported that the migrant population dropped by 5.68 million in 2015 -- its first decline in about three decades.

Some of that decline is simple demographics, and parallels China's rapidly shrinking labor force. But much of it is attributable to a slump in the labor-intensive manufacturing sector, and a steady improvement in rural economies. These trends haven't caught authorities completely off-guard: Despite a long-term commitment to urbanization (in 1980, China was 19.6 percent urbanized; today the figure is more than 50 percent), the government has recently directed more attention and money to rural development projects, ranging from infrastructure improvement to credit support for the country's hundreds of millions of farmers. This year, rural per-capita income is expected to exceed 10,000 yuan for the first time, surpassing urban income growth for the fifth straight year.

But just as economics were never the sole reason for moving to the city, many migrants also have non-economic motives for moving back home, including a desire to care for aging parents left behind and a hunger for uncontaminated food.

"The migrant workers are rooted in the countryside," said Yang Tuan, a prominent sociologist at the China Academy of Social Science, in a September interview. "They have feelings for the land." She predicted that reverse migration might peak in the next five to 10 years.

On balance, that should be good news. It should help alleviate the overcrowding in China's biggest cities and the sharp income disparity between rural and urban areas. Returning migrants tend to be more worldly and wealthy than when they left, as well as more entrepreneurial: The number of people starting new businesses in rural China grew 3.1 percent, year over year, in the first half of 2015. In total, about 2 million migrants have returned home to start businesses. That trend appears to be accelerating: Sichuan Province, China's leading source of migrant labor, reports that more than 40,000 of its returned migrants have attempted to start businesses over the past year.

The government could still do more to help, starting with expanding access to capital via micro-credit programs (returning migrants don't attract many bankers), and boosting Internet access in rural areas (less than a third of rural inhabitants are online). Many returning workers will also be looking for training and jobs -- not a start-up opportunity. Agriculture, the industry that many of them left behind, is badly in need of modernization, and the government could help by creating agriculturally focused vocational schools that help workers gain entry to China's nascent but growing agribusiness sector. Long-overdue land reform would also allow farmers to finally choose for themselves how to buy, use and sell their small plots, and thus unlock the true value of China's countryside.

Reversing 30 years of demographic trends won't be easy for China's cities or its countryside. But the transition itself is a reminder that decades of reform is finally starting to pay off for some of China's most economically backward regions.

That's worth celebrating this Chinese New Year.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Adam Minter at aminter@bloomberg.net

To contact the editor responsible for this story:
Timothy Lavin at tlavin1@bloomberg.net